Keir Starmer on verge of Chagos Islands U-turn as he drops bill to cede British sovereignty to Mauritius

This reversal would constitute the Prime Minister's 16th significant policy U-turn since taking office.

While Downing Street maintains its commitment to the agreement and intends to seek a change of heart from the US President, officials have conceded that proceeding without Washington's endorsement is impossible.

Mr Trump initially endorsed the deal following detailed negotiations between intelligence services from both nations, however he reversed course amid tensions with Nato concerning his ambitions for Greenland.

Under the proposed arrangement, Britain would have ceded sovereignty of the archipelago to Mauritius while simultaneously securing a 99-year lease for the Diego Garcia base, which has played a role during the Iran conflict.

Although the financial implications of the deal became a point of sharp disagreement between the two main parties.

Ministers maintained the total cost would reach £3.5billion, while Conservative critics insisted the true figure over the agreement's lifetime would amount to £35billion.

The Prime Minister had staked considerable political capital on pushing through the controversial agreement, despite fierce resistance from both the Tories and Reform UK.

Critics had cautioned proceeding would violate a 1966 Anglo-American treaty affirming British sovereignty over the islands and guaranteeing their availability for mutual defence purposes.

A Government source defended the administration's position, telling The Times: "Diego Garcia is a critical strategic asset for both the UK and the United States and securing its long-term operational future is the sole purpose of this deal.

"We continue to believe the agreement is the best way to protect the long-term future of the base.

"But we have always been clear that we would only proceed with US support."

Officials blamed delays within the American system for leaving insufficient parliamentary time to complete the necessary steps this session, describing the situation as "deeply frustrating following years of intensive engagement".

Relations between Sir Keir and Mr Trump have soured considerably throughout the Iran conflict.

The American President was put out when Britain refused permission for US forces to launch initial strikes from British bases, accusing Sir Keir of weakness and declaring he was "no Winston Churchill".

This week, the Prime Minister remarked that the public is "fed up" with both Mr Trump and President Putin's actions driving up living costs for Britons.

Conservative leader Kemi Badenoch claimed credit for the deal's apparent collapse, declaring: "If Keir Starmer's Chagos surrender deal now finds its rightful place on the ash heap of history, it will be because the Conservatives led the fight against it from day one.

"That it took so long is another damning indictment of a prime minister, who fought to hand over British sovereign territory and pay £35billion to use a crucial military base which was already ours.

"Unlike Labour, we will always put our country first. We are the only party who can be trusted to stand up for Britain’s interests abroad."

Reform leader Nigel Farage also personally lobbied senior Trump administration figures to oppose the agreement during his discussions with them.

Ministers now fear Mauritius may pursue legal action through the International Tribunal on the Law of the Sea.

They believe any "provisional measures" could grant Mauritius temporary access to waters surrounding Diego Garcia, potentially hampering nuclear submarine operations and naval patrols.

Robert Jenrick, Reform UK Treasury spokesman, responded to the development on X, writing: "If the Chagos surrender is dead, this is a great victory.

"One day, there should be an inquiry into this shabby saga - the Ministers and officials, under Labour and the Tories, who tried to sell Britain out. Shameful."