When a Long Island town last month agreed to settle a lawsuit over a mosque’s plans to upgrade its modest facilities, it appeared to end a seven-year fight in which the town had opposed basic renovations at every turn.

Two weeks later, the battle began anew.

By Aug. 29, after a fierce, familiar backlash from residents, the Town of Oyster Bay had abruptly backed out of an agreement with the mosque, Masjid Al-Baqi, that would have allowed the demolition of its buildings and the construction of a three-level structure. Lawyers for the mosque blamed a “fresh wave of anti-Muslim agitation.”

The now-scuttled deal followed years of opposition to the mosque, at local planning advisory board meetings, in emails to town officials and in posts on social media from residents of Bethpage, a hamlet within Oyster Bay. Some criticism cited concerns about traffic and public safety, but some opponents have also used virulently Islamophobic rhetoric.

“There were people who just couldn’t contain their bigotry and racism,” said Muhammad Faridi, a lawyer for the plaintiffs. “This is not a mega mosque.”

The mosque sued the Town of Oyster Bay in January, claiming that it had violated the free exercise of religion by subjecting it to years of red tape. The town even invented testimony from a fake grandmother, the plaintiffs say. The case will be heard in Federal District Court in Central Islip, N.Y., on Oct. 27.