Excerpts from Books and Wikipedia
"Now that the city was no longer in Turkish hands, more Christian pilgrims came to visit it; but all three crusader states were constantly under attack, and the journey was a perilous one. In 1119, the Frankish nobleman Hugh of Payens came to Jerusalem, searching for a way to better his soul. He decided that protecting pilgrims who were travelling unarmed from the coast to the city was a righteous mission, and over the next few years he recruited like-minded men to help him. . . Like monks, they took vows of poverty, chastity, and obedience; unlike monks, they carried arms. Their services were so greatly appreciated by travellers to Jerusalem that King Baldwin II decided to make provision for them; he 'granted them a temporary dwelling place in his own palace,' says William of Tyre, 'on the north side by the Temple of the Lord.' They took their name, the Knights Templar, from this dwelling place." [Bauer; Medieval World, p. 665]
Pope Honorius II approved the Knights Templar as a new military order in 1128. [Wikipedia]