The Town of Oyster Bay has backed out of an agreement to settle a federal lawsuit with the group Muslims on Long Island Inc. over its proposed mosque expansion in Bethpage.

The town's decision, issued Thursday, cited traffic concerns, and it fractures a deal it had agreed to less than two weeks ago to pay the Masjid Al-Baqi mosque's legal fees, green-light a new mosque and amend town code, among other concessions. In a court document filed Thursday night, MOLI's lawyers called the town’s move “stunning” and a reversal of a settlement that “was signed by both sides.”

Oyster Bay was required under the settlement to hold a town board meeting within 10 days of agreeing to it, for approval. The town told Newsday of its plan to withdraw from that pact Thursday afternoon. Lawyers for MOLI s

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