Synthesis of highly active nano-crystalline, thermally stabilized solid acid catalyst has been reported by loading different weight fractions of sulfated zirconia on chemically activated fly ash through two step sol-gel technique. The catalysts were characterized using powder XRD, FT-IR. N-2-adsorption desorption study. CHNS elemental analysis, SEM-EDAX and their acidity were measured by pyridine adsorbed FTIR. Liquid phase benzylation of benzene and toluene with benzyl chloride was studied as test reaction for catalytic activity of SZF catalysts. A very high conversion of benzene (87%) and toluene (93%) were observed, which is attributed to significant amount of acid site on the catalyst surface. The FTIR study of the pyridine adsorbed samples reflects the presence of Bronsted as well as Lewis acid sites. The catalyst with 12 wt.% zirconia (SZF-12) was regenerated and reused up to four reaction cycles with equal efficiency as in the first run. (C) 2010 Elsevier B.V. All rights reserved.