It is nearly 40 years since the Chagos islanders were evicted by the British government from their Indian Ocean home, but the legal battle aimed at giving them the right to return is still continuing.

This week, in the House of Lords, a resettlement plan for the islanders will be symbolically presented to the Chagossians' leader in exile in the hope of speeding a conclusion to the bitterly fought dispute.

The residents of the archipelago were removed in 1971 to make way for a military base in Diego Garcia. They were dispatched to Mauritius and the Seychelles, where many have since died in poverty. They received limited compensation in 1982 in return for signing away their rights to return and in 2002 they were granted British citizenship.

Ten years ago the Chagossians, some of whom now live in England, began legal action for the right to return, and in 2000 the divisional court ruled their eviction illegal. The foreign secretary at the time, Robin Cook, agreed they should be allowed to return to all the islands except Diego Garcia.

However, after the September 11 attacks in the US, Diego Garcia became an important base for the wars in Afghanistan and Iraq. In 2004 the UK government issued orders in council which negated the court's ruling, but two years later the high court ruled in favour of the Chagossians. In May last year the government lost again at appeal. In November the Lords granted the government leave to appeal but ordered it to pay all legal costs, regardless of the decision. The case has been allotted five days from June 30, after which every legal avenue will have been exhausted.

Richard Gifford, lawyer for the Chagossians, said: "We have now had three decisions in our favour, involving a total of seven judges." It would need "quite a cataclysm to decide that all seven were wrong". He added: "Legally, it is the end of the road for the government."

At the heart of the Chagossians' case is their claim that the resettlement is feasible, even given the time lapse. Tomorrow, the first independent resettlement plan will be handed to the Chagossian leader, Olivier Bancoult, in the presence of MPs, MEPs and peers, in what the islanders and supporters hope will be a persuasive case for a retreat by the government. The study, backed by the Let Them Return campaign and written by John Howell, former director of the Overseas Development Institute, suggests there are "no physical, economic or environmental reasons" why resettlement on the islands of Peros Banhos and Salomon should not happen. It suggests about 150 families, fewer than 1,000 people - about a quarter of those entitled to go back - would want to return. Eco-tourism and fish exports could provide jobs and income. The total cost to the UK of resettlement would be about £25m.

An FCO spokesman confirmed that the government appeal would go ahead.

© 2008 The Guardian