Donald Trump is said to be weighing up a proposal to acquire the Chagos Islands directly and effectively crush Keir Starmer's surrender plan.
American officials have prepared a plan that would see Washington negotiate its own arrangement to secure control of Diego Garcia, the vital military installation in the Indian Ocean archipelago.
Treasury Secretary Scott Bessent has personally brought the concept to President Trump's attention, though sources indicate it does not currently represent the White House's preferred course of action.
"We remain in regular discussions with our British allies as we work together to preserve the viability of Diego Garcia as a regional security platform," a US official told the Telegraph.
The proposal forms part of a broader White House document outlining alternatives to the Prime Minister's agreement, which would transfer sovereignty of the islands to Mauritius.
Under Sir Keir's original arrangement, Britain would have handed over the territory and subsequently paid approximately £35billion over a 99-year period to lease back the joint military base.
The deal was put on hold indefinitely in April after President Trump withdrew American support for the sovereignty transfer.
Administration officials have expressed concern about ceding control of the surrounding waters to Mauritius, given the country's close ties to both China and Iran.
American officials have prepared a plan that would see Washington negotiate its own arrangement to secure control of Diego Garcia
|REUTERS
For Washington to purchase the islands outright, Sir Keir's deal would first need to proceed, with negotiations then taking place directly with Port Louis once sovereignty had changed hands.
Diego Garcia's strategic significance has been thrown into sharp relief by the ongoing conflict with Iran.
The remote atoll hosts one of the Pentagon's most critical overseas facilities, serving as a hub for bomber operations, naval activities and intelligence missions.
During the current hostilities, the base has enabled long-range strikes on Tehran using B-2 Spirit stealth bombers, with its position placing Iran within striking distance for round-the-clock missions.
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Under Sir Keir's original arrangement, Britain would have handed over the territory and subsequently paid approximately £35billion over a 99-year period to lease back the joint military base
|GETTY
Ben Judah, who served as special adviser to former Foreign Secretary David Lammy, told the Telegraph: "This airbase…has super secret, super sensitive facilities there which are so important to what Britain is able to do in the world."
He added that Britain "would never be able to replicate" these capabilities independently.
President Trump initially appeared willing to accept the sovereignty transfer before dramatically changing course earlier this year.
In a series of public statements, he branded the arrangement an act of "great stupidity" and warned Sir Keir against "giving away Diego Garcia."
The Potus's opposition intensified after the Prime Minister refused to permit American forces to use the base for strikes on Iran during the opening phase of the conflict.
Mr Trump has since launched repeated attacks on the Prime Minister, declaring he was "no Winston Churchill" and blaming him for the deterioration of the special relationship between London and Washington.
Robert Midgley, Spokesperson from the Friends of the British Overseas Territories said: "We welcome the US’s urgency to protect Western Security from malign actors, however, the Chagos Islands are British Overseas Territories and there is no need to cede, sell or lease to anyone.
"They have been British since 1814 and we intend for them to remain that way."
A Government spokesman said: “The Government inherited a situation where UK control over the military base on Diego Garcia was under threat and action was required to protect UK national interests and to prevent our adversaries from getting a foothold in a location of such strategic importance.
“Diego Garcia is a key strategic military asset for both the UK and the US, which has protected our shared security for nearly 60 years.
"Maintaining long-term operational control and security of Diego Garcia is the entire basis for the UK-Mauritius Agreement, an agreement borne out of the real long-term risks to the base of which both the UK and US are very well aware".