The Government has failed to pay back £500,000 of taxpayers' money used to house a group of exiled tropical islanders.

About 100 Diego Garcians, who arrived at Gatwick more than a year ago, were housed in Crawley while they fought for compensation after being kicked off their small island in the Indian Ocean.

They were removed from the island, then owned by the UK, in the Sixties and Seventies and sent to Mauritius to make way for a British and American missile base.

But they became unhappy with employment in their new country and a 100-strong group from the population of 1,000 came to Britain.

West Sussex County Council picked up the bill for their accommodation but was told it could claim it back once the High Court action was over.

Despite judges rejecting the islanders' pleas for compensation last October, the Government has still not paid the £500,000.

Councillors said the money could provide almost 70 childcare places at a new neighbourhood nursery; 40 placements at residential and nursing homes for a year; 60 intensive home care packages for a year; a year of full-time day care for 70 children; six weeks' respite care for 200 carers of older people or weekly shopping and house cleaning services for more than 500 people for a year.

Councillors added they had been snubbed when they approached the Government on the matter.

Lionel Barnard, West Sussex executive for social and caring services, said it was not fair the council had to pay for a national problem.

Mr Barnard said: "The court said it was our problem and we finished up paying for all this. There were various court cases running and the Government kept putting off paying the money back.

"We were writing to ministers and getting a letter back from customer services.

"We were getting fobbed off and told to go to another department.

"The Government needs to repay the council taxpayers of West Sussex.

"We are not going to go away. They have a responsibility to our taxpayers for the £500,000 paid on behalf of the Government."

A council spokeswoman confirmed it had written to Tony Blair but had received no response.

The Foreign Office has told the Diego Garcians, who are British citizens, they will not be repatriated or moved to islands near Diego Garcia. They have since appealed against the High Court decision.

The Department for Work and Pensions was unable to answer when the £500,000 would be repaid.