The city of Ayodhya has undeniably been a city of great antiquity and a sacred spot to the Hindus for a long time.  Giving the location of the city on the bank of river Saryu, and describing its area, prosperity and glory, Valmiki has said in his Ramayana:

Many Puranas attest the fact that Ayodhya was considered one of the six holiest of the holy cities.  To quote one:

In all Hindu scriptures since Valmiki, Ayodhya figures prominently and Lord Rama is referred to as an avatar of Vishnu.

Vyasa incorporated the story of Rama through the Ramopakhyan in the Vanparva of his epic Mahabharata.  The earliest sanskrit dramatist Bhasa who lived before the advent of Christ, wrote his dramas 'Pratima' & 'Abhishek' based on the life of Rama.  Identifying Rama with his archanavtar, he writes: 

Kalidas the greatest classical poet & dramatist devoted the 10th canto of his Raghuvansham, to the narrative of Vishnu's incarnation on earth as Rama.  In the 13th Canto of his book, where the poet refers to the return of Rama and Sita to Ayodhya in the Pushpak-Viman, he speaks of Rama as Vishnu himself: 

There is not a single important poet or writer in classical Sanskrit literature who has not paid his best obeisence to Lord Rama in one form or another.  Instead of attempting an exhaustive enumeration of such works or citing illustrations therefrom, we may only mention the following ones:

(A) Classical Sanskrit Literature:

Poems

(1) Kalidasa (C. 400 A.d.): Raghuvamsa
(2) Pravarasena (550-600 A.D.): Ravanavaho or Setubandha
(3) Bhatti : (500-650 A.D.) : Ravanavadha
(4) Kumaradasa : (c: 800 A.d.) : Janakiharana
(5) Abhinanda (9th cent.) Ramacarita
(6) Ksemendra (11th cent.):
(a) Ramayanamanjari
(b) Dasavatara-carita
(7) Soacakalyamalla (12th cent.) : Udararaghava
(8) Cakra Kavi (17th cent.) : Janakiparinaya
(9) Advaita kavi (17th cent.) Ramalingamrta
(10) Mohana svami : (1608 A.d.  Roac(a,)marahasya or Roac(a,)ma Carita (India Office MS.  of 1970 A.D.)

(1) Bhasa, (2nd cent.  A.d.) (a) Pratima (b) Abhiseka
(2) Bhavabhuti (8th cent.) (a) mahaviracarita (b) Uttararamacarita
(3) Dinnaga (9th cent.) Kundamala
(4) Murari (900 A.D.) Anargharaghava
(5) Rajesekhara : (10th cent.) Balaramayana
(6) Hanuman: Hanumannataka or Mahanataka
(7) Saktibhadra (9th cent.) Ascaryacudamani
(8) Yasovarman : Ramabhudaya (8th cent.)
(9) Mayuraja : Udattaraghava
(10) Anonymous : (a) Chalit RM (b) Krtya RM (c) Mayapuspaka (d) Svapnadarsana
(11) Ksirasvami : Abhinavaraghava
(12) Ramachandra (a) Raghuvilasa
(12 cent.) (b) Raghavabhyudaya
(13)Jayadeva : Prasanna-Raghava (12 cent.)
(14) Hastimalla : Maithikalyana (1290 A.D.)
(15) Subhata : Dutangada (13 cent.)
(16) Bhaskara Bhatta : Unmattaraghava (14 cent.)
(17) Tryasamisradeva : Ramabhyudaya (15 cent.)
(18) Mahadeva : Adbhutaramayana (17 cent.)
(19) Ramabhadra Diksita : Janakiparinaya

(i) Slesakavyas

(1) Dharnanjaya : Raghavapandaviya (12 cent.)
(2) Madhava Bhatta : Raghavapandaviya
(3) haradatta Suri : Radhava-Naisadhiya
(4) Cidambara : Radhavapandaviya-Yadaviya (1600 A.D.)
(5) Gangadhara Mahadevakavi : (18 cent.) Sankatanasanastotra 

(1) Suryadevi : Ramakrshna-viloma-Kavya (1540 A.D.) 

(1) Krsna Mohana: Ramalilamrta
(2) Venkatesa : Citrabandha RM 

(1) Venkatadesika : Hamsasandesa or Hamsaduta
(2) Rudra Vacaspati : Bhramaraaduta
(3) Vasudeva : Bhramara-sandesa
(4) Anonymous : Kapiduta
(5) Venkatacarya : Kokilasandesa
(6) Jayadeva Ramagita-Govinda
(7) Krsnacandra : Candraduta
(8) Harisankara : Gitaraghava
(9) Prabhakara : Gitaraghava
(10) Haryacarya : Janakigita
(11) Harinatha : Ramavilasa
(12) Visvanathasimha Sangita Raghunandana
(13) Visvanatha : Raghavavilasa
(14) Somesvara : Ramasataka

(1) Ksemendra : Brhatkathamanjari
(2) Somadeva : Kathasaritasagara
(3) Bhoja : Campu RM (Many other campus such as Uttararamayana Campu, etc.  based on Uttarakhanda of RM)
(4) Vasudeva : Ramakatha

Ramayanas

(1) Valmiki Ramayana
(2) Ramopakhyana in the Mahabharata (Vana Parva)
(3) The Yoga Vasishtha or the Vasishtha Ramayana
(4) Adhyatma Ramayana
(5) Adbhuta Ramayana
(6) Ananda Ramayana
(7) Bhushundi Ramayana
(8) Maha Ramayana
(9) Mantra Ramayana
(10) Vedanta Ramayana

(11) Vishnu Purana (4th C.) (IV,4,5)
(12) Brahmanda Purana (4th C.) (2.21)
(13) Vayu Purana (5th C.) (II,26)
(14) Bhagvata Purana (6/7th C.) (IX,10-11)
(15) Kurma Purana (7th C.) (I.19,21: II.34)
(16) Agni Purana (8th C.) (Ch.  5.12)
(17) Narada Purana (10th C.) (I.79, II.75)
(18) Brahma Purana (Ch.  213, 70-175)
(19) Garuda Purana (10th C. (I.143)
(20) Skanda Purana (11/12th C.) (II.30)
(21) Padma Purana (12/15th C.) (Para 116, Uttara 24,43-48)
(22) Vishnu Dharmottara Purana
(23) Narasimha Purana
(24) Vahni Purana
(25) Shiva Mahapurana
(26) Devi Bhagvata Mahapurana
(27) Brihaddharmapurana

(28) Rama-Purvatapaniya Upanishad
(29) Ramottaratapaniya Upanishad
(30) Rama-Rahasyopanishad

(31) Agastya Samhita
(32) Kaliraghava
(33) Brihad-raghava
(34) Raghaviya Samhita

(C) Other Religious Literature

(1) Jaiminiya Ashvamedha
(2) Mailravana Carita or Hanumanad-Vijaya
(3) Sahashramukha-ravanacharitam
(4) Satyopakhyana
(5) Hanumat-Samhita
(6) Brihat-Koshalakhanda

For the last two millenia, the tradition of veneration to Rama has existed in the Hindu society in one form or other.  The earliest known inscription to testify this is found in the Nasik cave inscription of 19th regnal year, that is 150 A.D., of Satvahana king Vasisthi-putra Pulumavi which contains the following eulogisation of Gautamiputra Satkarni:

A series of subsequent inscriptions such a Gandhar inscription of Vishwavarman (423 A.d.), Chalukya inscription of Pulakesin I (543 A.D.), Mamallapuram inscription (8th century A.D.), Hansi inscription of Chahmana Prithiraja II (1168 A.D.) establish the continuity of this tradition throughout.

Iconometric evidence proves that the worship of Rama as an incarnation of Vishnu is at least as old as the time of Brihatsamhita of Varahmihir, (5th century A.D.) who prescribes the details of Rama's iconometry in chapter 57 verse 30.  Till the end of the 12th century A.D., the canons of iconometry regarding the image of Rama was laid down in the Matsyapurana, Manasollas, Bhatta-utpal & Al-Beruni.

Not only the Padmapurana 1.2.3.  Haribans 1.41, Brahmapurana, ch 180, Garudapurana 1.202, Varahpurana ch.  IV, but also the Gwalior inscription of the Gurjar Pratihar king Bhoja in the 9th century described Rama as an incarnation of Vishnu.

Besides Manasollas, Dasavatarcharit of Kshmendra, Gitagobindam of Jaidev, Naisarhcharit of Sri Harsha & the Ram Charitam of Sandhyakarnandin adulate Rama as Vishnu's avatar.

Even the ancient Jain writers such as Amitagati (11th century) spoke of Rama as the all-knowing & all pervading protector of the World.

The evolution of the tradition of Rama worship at least from 4th century A.D. is established by the early Rama shrines surviving at ancient Ramgiri hill (modern Ramtek) 30 kms from Nagpur, dedicated by the Vakataka queen Prabhawatigupta (5th century), Ambhamata temple at Osion near Jodhpur, (11th century) containing images of Rama-Janaki & Hanuman, Rajivlochan temple (12th century) at Rajim in Raipur disctrict erected by Jagapal the minister of Kalachuri king Pritideva II and dedicated to Rama by an inscription of 1145 A.D., and the Rama temple at Mukundapur in Reva district (12th century) built by Malaysingha.  Paintings depicting episodes from Rama's life have adorned the walls of numerous temples in India and outside from the famous Deogarh temple in M.P.  (late gupta period) to the Angkor Bat in Cambodia.

According to well researched conclusion of scholars, there existed at least five Vishnu temples in Ayodhya in the 12th century viz.

(1) Harismriti (or Guptahari) at the Gopratar (goptar) ghat,
(2) Chandrahari on the west side of the Swargadwar ghat,
(3) Vishnuhari at the Chakratirtha ghat,
(4) Dharmahari on the east side of Swargadwar ghat, and
(5) Vishnu (Rama) temple on the Janmabhoomi.

The last three of these have been replaced on all accounts by mosques built by Mughal emperors.

These are both textual and archaeological evidence to prove that it was a common practice from early times for the devotees of Rama (or Krishna) to offer worship to a temple image which was looked upon as being an embodiment of Rama (archanavtar).  Instead of worshipping Rama in his earthly human form, a practice has grown of devotees worshipping him in the form of one (Vishnu) whose avatar he was believed to be.  The textual support to this practice is found in the Padmasamhita, a Vaishnav text dating before 1000 A.D.  which says:

(That is, when an image of Rama is installed independently in the Sanctum for the sake of worship, it should have four arms).

This practice was quite natural, considering that Rama was initially seen as an incarnation of Vishnu, but came later to be seen as Vishnu himself.  This practice is corroborated by the images installed in the ancient Rajivlochan at Ambamata temple referred to earlier.  In the former, the temple has been specifically dedicated to Rama by an inscription (1145 A.D.) and been popularly known and revered as Rama temple, but the image inside is that of four-armed Vishnu.  In the latter, the images of Rama & Sita are completely like Laxmi-Narayana but are identified as Rama-Sita by the presence of the seated Hanuman at their feet.  An inscription of 467 A.D. testifies to the installation by a devotee of the image of Chitrakutsavami-Anantashayi" referring to both Rama & Vishnu.

An inscription of 467 A.D.  testifies to the installation by a devotee of the image of Chitrakutsavami-Anantashayi" referring to both Rama & Vishnu.  The same practice is indicated by an inscription found at Ayodhya which says that the Gahadval king, Chandradeva visited Ayodhya on 23rd Oct.  1093 on a pilgrimage on the occasion of a solar eclipse when he bathed in the Saryu and performed the worship of Vasudeva the protector of the three worlds.

The long tradition of Rama worship as evidenced lay the numerous literary, scriptural and archaeological sources culminate in the 12trh/13th century in the Ayodhya-Mahatmya forming part of the Skandapurana which describes the various holy spots in Ayodhya, and extols the pilgrimaage to the city as the best means to salvation.  Along with various other holy sites associated with Ram such as Goptar ghat, Swargadwar, Sahasradhara (all of which exist till this day) etc; the Ayodhya-Mahatmya profusely eulogizes the Janmabhoomi shrine and gives it location.  The merits of a visit by a devotee observing the vow ( ) on the Ramanavami day to the Janmasthana has been described in Ayodhya-Mahatmya in the following words:

"A man who has seen the Janmasthana will not be born again even if he does not offer gifts, practise asceticism, goes on pilgrimages or make sacrifice-offerings.  A man observing the vow world be liberated from the bondage of rebirth on arrival of the Navami day because of the miraculous power of a bath and a gift.  By seeing the Ramjanmabhoomi he shall obtain the result that accrues to one who gives away a thousand red cows day after day." (see Annexure 1 for relevant extract of Sanskrit text)