Downing Street has been accused of delaying the surrender of the Chagos Islands for fear of a backlash from Labour MPs.

Ministers declared at the start of April that a controversial deal to hand the Indian Ocean territory to China ally Mauritius was being finalised.

It was widely thought there were no more hurdles to clear after Donald Trump said he had no objections to the handover despite one of the atolls, Diego Garcia, being home to a crucial Anglo-American military base.

Yet No 10 admitted yesterday that talks are still ongoing, amid suspicions that the final sign-off has been put back because the estimated £9billion price tag will prove politically toxic at a time when Labour MPs are being told to vote for massive welfare cuts.

A source told The Times: ‘They know that they’re going to be attacked by the Tories and Reform for giving up sovereignty of the Chagos Islands but it makes it much worse if they’re also being attacked from their own side.’