Britain said on Thursday it would cede sovereignty of the Chagos Islands to Mauritius in a deal it said secured the future of the UK-US Diego Garcia military base, and which could also pave the way for people displaced decades ago to return home.

US President Joe Biden welcomed the deal, saying it would secure the effective operation of Diego Garcia, a strategically important airbase in the Indian Ocean, into the next century.

British Foreign Minister David Lammy said the deal settled the contested sovereignty of the islands, the last British overseas territory in Africa, while ongoing legal challenges had imperilled the long-term future of the Diego Garcia.

He said the base, whose strategic significance was demonstrated during the Iraq and Afghanistan conflicts where it acted as a launch pad for long-range bombers, was now guaranteed for at least 99 years.

Britain, which has controlled the region since 1814, detached the Chagos Islands in 1965 from Mauritius - a former colony that became independent three years later - to create the British Indian Ocean Territory.

In the early 1970s, Britain evicted almost 2,000 residents to Mauritius and the Seychelles to make way for an airbase on Diego Garcia, the largest island, which it had leased to the United States in 1966.

A non-binding resolution in the United Nations General Assembly in 2019 said Britain should give up control of the archipelago after wrongfully forcing the population to leave.

In 2016, Britain's Foreign Ministry extended Diego Garcia's lease until 2036, and declared the expelled islanders would not be allowed to go back.

The new agreement said Mauritius would be free to implement a programme of resettlement on the islands other than Diego Garcia, with the terms left for Port Louis to decide. (Reuters)