The decision to accept the land was taken at a board meeting in Lucknow.
"It has been decided at a meeting of the board to take the five-acre land given to us by the UP government," board chairman Zufar Farooqui told reporters.
He said the board will set up a trust soon for the construction of the mosque.
Asked if whether the planned mosque would be named after the demolished Babri Masjid, Farooqui said, "It will be decided by the trust. The board has nothing to do with it."
"Besides the mosque, there will be an Indo-Islamic research center, a public library, a charitable hospital and other useful facilities on the land", he said.
He said the size of the mosque will be decided keeping in mind local needs.
In a verdict in November on the Babri Masjid dispute, the Supreme Court ruled in favor of construction of a temple.
It also ordered that an alternative five-acre plot must be found for a mosque within Ayodhya.
The 16th-century Babri mosque that stood on the disputed site in Ayodhya was demolished in 1992 by karsevaks, claiming that originally there was a Ram temple at the same spot.
Soon after last year’s verdict on the Ayodhya land dispute, there were suggestions that the Sunni board should not accept an alternative plot.
There were also suggestions that instead of a mosque to replace the demolished Babri Masjid, the Muslim community should build a public facility, like a hospital, there.
The Sunni Waqf Board, however, made it clear that rejecting the site was not an option.
"Following the Supreme Court verdict, the Sunni Waqf Board does not have the choice of rejecting the five-acre alternative land for the construction of a mosque in Ayodhya as it would amount to contempt of court," Farooqui had said earlier.
Including Farooqui, the Sunni Waqf Board has eight members. Six of them attended the meeting.