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A holy war is brewing in a small North Carolina city, where the Christian flag seems to be flying everywhere.

A meeting of the King, N.C., City Council was packed on Monday with dozens of citizens who asked city officials to put the Christian flag back up at the local Veterans War Memorial. The council had voted to take down the flag rather than spend the estimated $200,000 to $300,000 it would cost to fight the American Civil Liberties Union in a First Amendment lawsuit.

"The city received inquiries from the ACLU and the Americans United for the Separation of Church and State suggesting that the Christian flag flying over the Veterans Memorial at Central Park violates the Establishment Clause of the First Amendment to the U.S. Constitution," City Manager John Cater said. "At the advice of the city attorney, the City Council voted to take down the Christian flag at last night's City Council meeting, citing the enormous cost associated with fighting a potential lawsuit on the issue."

Katy Parker of the ACLU in North Carolina told FoxNews.com, “The city council did the right thing to take down the flag because it was endorsed by the city as part of a public monument. Now, if private citizens want to hold the flags, it is absolutely their right to do so.”

And so they have.

"They were talking about one obscure flag in the back corner of the park. All of a sudden, there's flags on every porch, on every business and in every yard," catering store owner Mike Marshall told MyFox8.com in North Carolina. "It really brought a lot of awareness to the fact that this is a Christian community."

Marshall's neighbors, in large number, agree, and they told the City Council on Monday that they are willing to help pay the cost of fighting a lawsuit.

"I believe God will give you the finances to take care of that court cost," resident Gary Priddy said.

"Look at all the hundreds of people that got upset that the flag was taken down. I think we count for something," the Rev. David Keaton of the local Baptist Church told MyFox8.com.

The ACLU's Parker told FoxNews.com that an Afghanistan war veteran had complained about the flag -- and then a Korean war veteran and then other citizens, though she said she could not release their names. She said the war veterans' reasoning for filing their complaints was that “they are fighting for the Constitution, and government protects all U.S. citizens by staying neutral on issues of religion, so that everyone as private citizens can express their religious views.”

"The courts have repeatedly ruled that the government cannot favor one religious belief over others. Veterans memorials should respect the diversity of all military personnel," the Rev. Barry W. Lynn, executive director of Americans United for Separation of Church and State, told FoxNews.com.

This week, at the same memorial, the same Afghanistan war veteran who complained about the flag also gave city officials until Friday to remove a cross on a statue of a kneeling soldier. If the cross is not removed, the veteran said, he would again contact the ACLU.

An American Legion Post put the monument and cross next to the veterans memorial on city-owned land. American Legion member Jim Rasmond told MyFox8.com, that his post will not remove the cross. Cater said the city "may or may not take action regarding those symbols at the next meeting."

But residents of King, a city of 7,000 that has more than 30 churches, overwhelmingly want the Christian flag put back in the public site, and they're rallying around it by flying it throughout the city at local businesses, in homes and in cars.

Monday was unofficially declared "Christian Flag Day" after a flyer was distributed saying, "We are asking citizens, business owners and churches to demonstrate support for the Christian flag to fly atop the Veterans Memorial at Central Park in King, NC, by flying a Christian flag on this day."

Local veterans are staking out the memorial and plan to wave the flag there round-the-clock for the next month to assure it is present.

The vigil was organized by Vietnam War veteran Ray Martini, who told MyFox8.com, "I refuse to let a few turn around and try to desecrate our intensive fighting and defending America by taking down what the majority love."

Marshall's business, Divine Catering, located across the street from the Veterans Memorial, has erected a 35-foot flagpole to fly the flag. "We just thought it would be a good way to show people what we think about the whole thing. I know it’s not city hall, but it’s as close as we could get," Marshall said.

Chris Smith of King RC Hobby Store said he has “noticed more and more flags go up each day in town.” He said he planned to put one up in his storefront as soon as he has time.

"It has brought the community together," Arlene Austin wrote on the MyFox8.com Facebook site. "Just ride around King and notice the businesses and private homes that proudly have the Christian flag flying."

The ACLU says it fully supports the residents' right to free speech, but “there is a critical difference between private religious speech and government religious-based speech, which the government forbids,” Parker said.

Lynn added, "When the government puts up the symbol of one faith, they are leaving out so many that have served our country."

But one faith appears to be overwhelmingly in the majority in King, and businesses are quickly running out of Christian flags.

"Ever since the city council ruling, people have been calling left and right. We sold out already and had a major shipment come in this morning with 300 more on the way tomorrow," a worker at Guillions Christian Store told FoxNews.com.

MyFox8.com in North Carolina contributed to this report.