Exiled islanders removed from their home in the central Indian Ocean to make way for a US airbase will not be allowed to return, the Government has announced.
Instead, Foreign Office minister Baroness Anelay of St Johns, has offered around £40 million over the next 10 years to support existing Chagossian communities elsewhere in the world, which include Crawley in West Sussex.
The government also announced that the US will continue to maintain its major military base on Diego Garcia, the largest of the islands, until 2036.
Chagossians were forced to leave the territory by 1973 to make way for the air base.
The expulsions are regarded as one of the most shameful parts of Britain's modern colonial history.
In June, former residents of the islands who want to return lost their legal challenge at the Supreme Court.
In a written statement to Parliament, Lady Anelay said: "I am today announcing that the Government has decided against resettlement of the Chagossian people to the British Indian Ocean Territory on the grounds of feasibility, defence and security interests, and cost to the British taxpayer.
"In coming to this decision the Government has considered carefully the practicalities of setting up a small remote community on low-lying islands and the challenges that any community would face.
"These are significant and include the challenge of effectively establishing modern public services, the limited healthcare and education that it would be possible to provide, and the lack of economic opportunities, particularly job prospects."
Adventurer and television presenter Ben Fogle, patron of the UK Chagos Support Association, called the decision "heartbreaking".
In 2015, Fogle insisted he would charter a boat and take exiled islanders back to their homeland if the Government refused to "right a terrible, terrible wrong".
Labour leader Jeremy Corbyn, a long-term supporter of allowing the Chagossians to return, said the Government has "failed to deliver justice" and there is no legal basis to prevent resettlement.
He said: "For so long, the Chagos Islanders have fought with dignity for their right to live where they were born and grew up.
"But this Government has today failed to deliver the justice owed to the Chagossians, wholly innocent of anything, abominably treated and brutally removed from their homes.
"Today's decision should be seen as nothing less than a fundamental denial of a basic human right. There remains no legal basis for preventing the Chagossians' return."