Link: http://news.bbc.co.uk/1/hi/uk_politics/1005064.stm

In an ocean far far away called the Indian Ocean...lies an Island archipelago just South of the Equator. This is the Chagos Archipelago. Geographically and geologically, it is a chain of corall atolls, which have in turn grown on the top of submerged volcanic eruptions from the mid-oceanix ridge. The Chagos is one of three archipelagoes located on this ridge, the other two being the Laccadive and Maldives archipelagoes.
The Chagos islands were occupied until the end of the 1960's by an ethnic grouping known as the Chagossais. They were of mixed origin, and spoke a creole based around the French language. They lived (like most archipelago dwellers) by harvesting the sea, and growing fruit and vegetables on the limited land areas of the islands.
The Chagos islands formed part of an administrative unit of the British government called the British Indian Ocean Territory (BIOT). This included Mauritius, until the mid-1960's, when Mauritius was granted independence, but the British government retained sovereignty over the Chagos Archipelago. The government of Mauritius has recently renewed its claim to sovereignty over the Chagos Archipelago.
However, at the end of the 1960's, the lives of the Chagossais were to change dramatically, and not necessarilty for the better. They were forcibly re-settled by the British government. This constituted a typical high-handed colonial government saga, replete with deception, duplicity and the odd bit of unsubtle racism. Some of the basic facts of the story are summarized here.
One of the main underlying reasons was Cold War geopolitics. The United States needed a forward air base and sea port in the central Indian Ocean. They had determined that the large atoll of Diego Garcia would meet their requirements. The British government was prepared to oblige the USA, and Diego Garcia was leased to the United States for 30 years. The USA took over the atoll and built an air and sea base. This has been used extensively by the USA in several recent conflicts, including the 1991 Gulf War, and the more recent campaigns in Afghanistan and Iraq. An excellent semi-serious website maintained by former DG military personnel can be found here. This website contains a number of links explaining aspects of the whole "smash and grab" of the archipelago, and the handoff of DG to the USA.
As you might expect, Diego Garcia is off-limits to the public. The island is nominally controlled by the UK, but in practice the USA runs the island. The remainder of the archipelago is not accessible by any public transportation mechanism; there are no air flights or sea traffic to and from Chagos. However, a thriving temporary community of yachties hangs out in the larger atolls for most of the year. The British government administrators on Diego Garcia charge them a mooring fee, collected monthly, and also ensure that trash is properly disposed of so that the islands remain pristine. The rest of the archipelago is one of the last largely unspoilt natural island archipelagoes. If you can get there, you can be Robinson Crusoe and have your own little island for a day.
The Chagos islanders have been trying to return to the archipelago for the last 10 years. They initially won a lawsuit in London against the British government, then lost another in 2003, with the judge in that case handing down a patronizing ruling.
Eventually, the British government tried to remove the possibility of further legal defeats by invoking the Royal Prerogative. Royal Prerogative is an ancient power of the monarch, along the lines of "You'll do this because I said so because I Am The Monarch". It is very rarely used in modern Britain, because it essentially trumps normal processes of law-making; it mostly bypasses both Parliament and the judicial system.
On the request of the government, The Queen approved an "Order in Council" on June 10, 2004, to uphold the 40-year-old eviction of the Chagosians from their homes on the archipelago.
To their credit, the Chagos islanders have not given up. They are currently challenging the Order in Council. The fight continues. In addition, the Chagossais filed a lawsuit in the USA, seeking a declaratory judgment that their eviction was unlawful. Legally, this is a long-shot, as this rather detailed analysis makes clear.
John Pilger has created a video program summarizing the whole story.