India's Supreme Court has appointed an arbitration panel to mediate in a decades-long dispute over a religious site in northern Uttar Pradesh state's Ayodhya city.

The court yesterday ruled that the Ram Janmabhoomi-Babri Masjid dispute, as the contentious case is known as, will now be mediated through a panel headed by retired Supreme Court judge FM Kalifulla.

The other members of the arbitration panel include senior advocate, Sriram Panchu, and self-styled Hindu godman, Sri Sri Ravi Shankar.

The 70-year-old case involves a dispute over a one-hectare site in Ayodhya, where right-wing Hindus plan to build a temple dedicated to Lord Ram on the ruins of a 16th-century mosque demolished in 1992.

The Supreme Court-appointed arbitration panel has been given eight weeks to come to an agreement, which coincides with India's national elections, due in April and May.

Hindu nationalist forces affiliated with India's ruling Bharatiya Janata Party (BJP) have ratcheted up their long-standing demand for the construction of a temple in the run-up to the election.

A five-judge Supreme Court bench, headed by Chief Justice Ranjan Gogoi, said the order is a bid to "heal the hearts if possible".

The court described the dispute as a "festering wound" which has touched the religious sentiments of Hindus and Muslims for decades and led to multiple rounds of communal violence.

In 1992, a Hindu mob tore down the Mughal-era mosque, triggering riots that killed about 2,000 people in one of the worst instances of communal violence in India since the 1947 partition of the country.

Out of concern for the sensitive nature of the subject, the court has directed the panel members to maintain utmost secrecy. The media has also been banned from covering its proceedings.

While holding control over the controversial site, the Supreme Court had been weighing petitions from both the communities on what should be built there.

Earlier, a five-judge panel, headed by Gogoi, had asked both Hindu and Muslim groups involved in the case to explore the possibility of resolving their dispute through mediation.

Hindu groups say there used to be a temple at the site before the mosque was built by Mughal ruler Zahir-ud Din Babar in the early 16th century.

It is the most divisive dispute between India's majority Hindus and minority Muslims, who make up around 14 percent of the country's 1.3 billion people.

Right-wing groups affiliated to the BJP had called for legislation to allow a temple to be built, bypassing the Supreme Court. But Prime Minister Narendra Modi later said the judicial process should be allowed to take its course.