Tony Blair has rejected a council's £500,000 compensation claim for looking after a group of exiled islanders.

West Sussex County Council wanted the Government to refund the cost of housing 75 Diego Garcians who have been unable to return to their island homes.

But the Prime Minister suggested the council had been wrong to spend the money and would have to account for it themselves - provoking an angry response from council leader Henry Smith.

The Diego Garcians, also known as Chagossians, arrived in Crawley when 45 landed at Gatwick in March last year and 30 came via Heathrow last July.

They have been protesting about their banishment from the tropical Indian Ocean island to Mauritius and Seychelles in the Sixties and Seventies, to make way for a military base.

The High Court ordered the county council to provide accommodation and support during their statutory six-month wait for state benefits.

In a letter to Crawley MP Laura Moffatt, Mr Blair said Diego Garcians had always been told they should be able to support themselves before choosing to travel to the UK.

He wrote: "Able-bodied Chagossians without care needs cannot expect to receive automatic support when they arrive in the UK.

"Our High Commissions in Mauritius and the Seychelles have provided clear advice on this to Chagossians applying for passports.

"The Government therefore does not accept West Sussex County Council was under a duty to provide support to the Chagossians.

"I understand the Department of Health advised the county council of this position on several occasions throughout 2003.

"In those circumstances, it would not be right for the Government to provide additional funding.

"We will also make clear that, should the council continue to provide support to any Chagossians who come to its area, it will have to fund that support from its existing budget."

Councillor Smith said: "This letter is wrong. I cannot believe the Prime Minister has been properly advised that the High Court ordered the county council to pay.

"If we were to follow the advice of the Prime Minister, we would be breaking the law.

"We have said time and time again supporting the islanders should not be the responsibility of the West Sussex taxpayer.

"However, the High Court disagreed, leaving us out of pocket by a huge amount of money.