The much-criticised deal to hand over Britain's Chagos Islands to Mauritius appears to be on the rocks, with Sir Keir Starmer reportedly deciding to delay the agreement out of fears it could creates a 'toxic' backlash from his own MPs.

The deal with Mauritius would require the House of Commons to agree to a massive multi-billion-pound settlement, part of which would be a payment to rent back the key Diego Garcia US-UK military base situated on the archipelago from Mauritius.

Last month it emerged that Downing Street was "ready to sign" the Chagos deal with Mauritius, with a speculated cost of around £9 billion, after receiving the green light from a sceptical President Donald Trump in February.

However, Number 10 looks set to put the agreement on the back burner, fearing Labour's already rebellious MPs, who will be asked to agree to deep cuts to disability benefits due to the government's own purported financial pressures.

While no official details have been released about the final cost of the deal, the Times reports the agreement is expected to tie the UK into paying £90 million per year for the next 100 years to give up its territory.

170 MPs are privately stating that they will either abstain or vote against cost-saving measures at the DWP in a Commons vote next month, which Labour hopes will slash £5 billion from the benefits bill.

One source told the paper that Downing Street now considered it politically "toxic" to bring forward the Chagos deal in this climate, fearing an even larger rebellion among MPs already being asked to justify slashing benefits.

The insider said: “They know that they’re going to be attacked by the Tories and Reform for giving up sovereignty of the Chagos Islands but it makes it much worse if they’re also being attacked from their own side.

“The deal is ready to go but Downing Street is refusing to give it the green light.”

Complicating matters for the Prime Minister are the disastrous local election results, which saw both main parties eclipsed by a wave of support for Reform UK - even losing a key parliamentary by-election to the insurgent Farage-led party.

Another political insider told the Times: “Everyone on the political side has overreacted to the local election results. There is a huge reluctance to do anything that could be controversial.”

Part of the reasoning behind the delay is a reluctance to hand easy ammunition to Nigel Farage, who has frequently campaigned against the deal and called for the UK to sell the islands instead.

Speaking in the Commons, he said: “They are clearly hellbent on giving away the Chagos Islands, whatever the risks to global security, whatever the risks to our own budgetary constraints, and having ignored completely the will of the majority of the Chagossian people.

“If that’s the case, I would rather see America have the sovereignty of the Chagos Islands than a corrupt Mauritius. If we’re going to give this up, let’s sell. Let’s sell, let’s get a few billion quid for the… Chagos Islands."

When the final Chagos agreement will be made is unclear, with another insider reportedly saying "I don't think we'll be hearing about Chagos for a while." Something Downing Street did not appear to deny in a statement, with no clear commitment ona timetable for delivery.

“The Chagos Islands negotiations were started by the Conservative Party and inherited by Labour. Work continues to deliver a deal that will protect the joint US-UK base, our national security and our intelligence gathering capabilities in the region,” it stated.