NEW HAVEN, Conn. (AP) — When Norwalk received a proposal to build the city’s first mosque, it was rejected by officials who said the structure was too big for the largely residential area and would create too much traffic.

The applicants filed a federal lawsuit alleging religious discrimination and the U.S. Justice Department, which has been intervening in mosque projects around the country, launched an inquiry into the handling of the proposal.

Now, the city is moving to settle the lawsuit and support a version of the closely watched project. Norwalk officials say religion was never part of their considerations.

‘‘It was not based on any religious bias,’’ Mayor Richard Moccia said. ‘‘I can’t recall any zoning officer or any city official ever commenting that it happened to be a mosque and that’s the reason they were opposing it.’’

Moccia said the Justice Department wrote about two months ago, seeking information such as minutes of a zoning hearing on the project. He said the city responded and has not heard back from federal officials.

A Justice Department spokeswoman declined to comment.

The Al Madany Islamic Center of Norwalk sued in June after the Zoning Commission rejected the $3.5 million project. On Nov. 29, the Zoning Commission voted to approve the mosque, subject to an agreement on the terms and conditions of a final settlement.

‘‘We are absolutely glad to see this,’’ said Mongi Dhaouadi, executive director of the Connecticut chapter of the Council on American-Islamic Relations. ‘‘We’re going to let the process play itself out and hopefully we’ll celebrate at the end as a whole community in Norwalk.’’

While Muslims comprise about 1 percent of the American population, 14 percent of the religious land use investigations by the Justice Department’s civil rights division in the past decade involved mosques or Muslim schools, according to a report last year.

Since the Sept. 11 attacks, the division has opened 28 matters involving construction of Muslim religious institutions.

‘‘Of those, 18 have been opened since May 2010, suggesting that anti-Muslim bias in zoning is on the rise,’’ the report stated.

Ibrahim Hooper, spokesman for the Council on American-Islamic Relations, blamed the spike in cases on controversy stemming from a proposed mosque near the site of the Sept. 11 terrorist attack in New York. He said an opponent of that project wrote a manual on how to stop mosques

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