“This nation was founded on the principle that the government must never choose between religions or favor one over another. The World Trade Center site will forever hold a special place in our city, in our hearts. But we would be untrue to the best part of ourselves and who we are as New Yorkers and Americans if we said no to a mosque in lower Manhattan.
“Let us not forget that Muslims were among those murdered on 9/11, and that our Muslim neighbors grieved with us as New Yorkers and as Americans. We would betray our values and play into our enemies’ hands if we were to treat Muslims differently than anyone else. In fact, to cave to popular sentiment would be to hand a victory to the terrorists, and we should not stand for that.
“For that reason, I believe that this is an important test of the separation of church and state as we may see in our lifetimes, as important a test. And it is critically important that we get it right.
His speech has shown up many places, this transcription is on Salon. It’s really worth reading in it’s entirety.