The Home Office is threatening to deport a teenage granddaughter of a former Chagos Islander, even though her mother holds British citizenship.

Taniella Moustache, 18, who has lived in Milton Keynes for six years and hopes to study psychology at a British university, could find herself separated from her mother and sent overseas where she has no family.

Her grandmother was among those forcibly evicted by the British government from the Chagos Islands in 1971 and resettled in the Seychelles.

The consequences of that original expulsion – to clear the archipelago for a US airbase on Diego Garcia – now threaten the third generation of the UK-based Chagossian community, who do not have automatic rights to British citizenship.

In the wake of the Windrush scandal, campaigners allege the government’s hostile environment policy is piling fresh suffering upon an unresolved historical injustice.

The 18-year-old’s mother, Jeanette, 38, was born in the Seychelles. She came to the UK in 2006 to find employment and now works in catering at the Open University. Her two daughters, Taniella and Nesta, who is now 16, followed her a few years later when she could afford their flights.

Jeanette has British citizenship but her daughters do not. Taniella and, in turn, Nesta risk being deported when they reach the age of 20 unless their mother can raise sufficient funds to pay for legal help to apply for their citizenship. A crowdfunding page has so far raised more than £6,000.

“[The UK government] removed my family [from the Chagos Islands] and put a military base there but now don’t want my kids to be British citizens,” Jeanette Valentin said. “The Home Office said they cannot give my children British passports because they were not born in England.

“They say I have to apply for citizenship but I cannot afford it. It is a lot of money, around £1,600 per child. I get paid only £600 to last every two weeks and my rent is £600 … sometimes I don’t have enough money to eat.”

She said she had heard of others with similar problems, including twins who were separated, one living in the Seychelles and her brother in England.

“My children are stressed out but people have been generous, donating lots of money. Before that my children could not see any light at the end of the tunnel, my youngest lost hope. The children of those who relocated should automatically be given citizenship.”

Henry Smith, the Conservative MP for Crawley, whose constituency is home to the largest concentration of Chagossians, has put forward a private member’s bill providing a legal route for everyone of Chagossian descent to claim British citizenship. It will have a second reading in parliament this month.

“Given the injustices that have been visited on them, this is something that should be rectified. It would probably only affect several hundred or perhaps 1,000 people,” Smith said. “The threat of deportation is hanging over young people just leaving school whose parents are British citizens.”

Smith has met the home secretary, Sajid Javid, to seek support for his bill. He hopes it will form part of broader government legislation to resolve nationality problems triggered by the Windrush scandal and Brexit. “I appreciate that immigration issues are sensitive, but this inequity needs to be sorted,” he said.

Alex Finch, a solicitor at the law firm Fragomen who specialises in nationality cases, and who advises the Chagos Refugees Group, said: “Generally British citizenship only goes down through one generation. Often the middle generation would have been given citizenship in 2002 through the British Overseas Territories Act. It is the grandchildren who are now facing difficulties. The Chagossians were removed from their homes against their will. There is a historic injustice.”

Mike Kane, the Labour MP for Wythenshawe and Sale East, whose constituency has the second largest number of Chagossians, also backs the bill. “There are more and more people coming through the door of my constituency office with these problems,” he said. “Parents coming in with their children. We have been wondering why third-generation [Chagossians] don’t have leave to remain and are being told to go back to Mauritius or the Seychelles.”

The Foreign Office promised a £40m compensation fund to cover the original expulsion, Kane said. “It was the mother of all injustices … but that money hasn’t been spent yet.”

Tom Guha, chair of the UK Chagos Support Association, said: “It is absolutely touching to see so many people rallying around Jeanette and donating their hard-earned income to keep her daughter in the country, but the bottom line is that no one should have to. It is for the government to fix this mess and they can make a start right away by supporting Henry Smith’s bill.”

Among those campaigning for nationality rights is the poet Benjamin Zephaniah, who has called on the government to waive any fees required for Chagossians to acquire citizenship.

A Home Office spokesperson said: “Under current British nationality law, citizenship is normally only passed on to one generation born abroad. This means that grandchildren of resettled Chagossians do not have a claim to British citizenship. There are no policies related to the removal of an individual based on their nationality. Each case is assessed on its individual merits.

“The home secretary met Henry Smith MP to discuss his British Indian Ocean Territory (citizenship) bill and committed to consider the matter further at the Home affairs select committee.”