The people of Diego Garcia, a British colony in the Indian Ocean, were thrown off their island to make way for a US military base. Lyn Gardner on how their story was made into a play

How would you feel if you left the UK for your annual holiday and were then told you could never come back? That's what happened to the people of Diego Garcia, the only inhabited island in Chagos Archipelago in the Indian Ocean, a remote UK colony officially known as the British Indian Ocean Territory.

In the 1960s, at the height of the cold war, the Harold Wilson government wanted to do a deal with the US, which was looking for a military base in the Indian Ocean in order to monitor Soviet activity. Diego Garcia was perfect. In return for leasing it to them, the British government won a lot of good will from the US and a major financial contribution to its Polaris submarine programme. The displaced Chagossians, raised within a largely barter economy, got nothing. They have a Kreol word for how they feel: sagren – unbearable sadness.

From the late 1960s onwards, those leaving the islands for shopping trips or emergency medical treatment often found their return barred. By 1973, all the inhabitants of Diego Garcia, the descendants of slaves brought there in the 18th century to work on coconut plantations, had been forcibly removed – dumped in Mauritius and the Seychelles, where they were left to fend for themselves.

Four decades on, the Chagossians – who gained full British citizenship in 2002 and now have a 1,000-strong community in Sussex – are still struggling to return home. Their story is told in A Few Man Fridays, a play written and directed by Adrian Jackson, the artistic director of Cardboard Citizens, a company that makes theatre for, and with, the displaced and the homeless. Jackson's previous work includes 2009's hugely acclaimed Mincemeat, about a secret second world war operation in which the corpse of a homeless man was used to deceive the Nazis about an invasion of Sicily.

"My interest has always been in marginalised people, the little people," says Jackson. "So often, the homeless are seen as drug addicts or alcoholics. Their homelessness is perceived as the result of a flaw or a series of personal misfortunes and failures. We forget that homelessness often arises from geo-political shifts, and that's the case here."

Successive British governments have avoided being shamed into action, but David Cameron and Nick Clegg both promised before the election that they would resolve this lengthy injustice. Nothing has been done. The law may yet force them to act, though. The Chagossians have taken their case to the European Court of Human Rights, where a judgment is imminent.

But the "war against terror" has made the US more determined to hang on to its Indian Ocean base. In February 2008, then foreign secretary David Miliband finally admitted that Diego Garcia, which is British soil, had been used on at least two occasions for extraordinary rendition, despite previous denials by Tony Blair. What's more, the entire archipelago, boasting some of the world's richest coral reefs, was recently made a marine nature reserve. A 2009 WikiLeaks cable revealed that the British government supported this project as a way of ensuring that the Chagossians would never return.

This pitting of the rights of the Chagossians against the protection of the environment is something Jackson vigorously questions in A Few Man Fridays. Who, it asks, should pay the price for saving the planet? "I love reefs. Of course, I want them to be there for my children. But I'm not sure the Chagossians' return is incompatible with environmental concerns. Is the footprint of the Chagossians greater than that of the US military base and the yachters who visit the area?"

With shades of The Tempest in its storm-tossed opening and a central character called Prosper (a homeless man in search of himself and his lost history), A Few Man Fridays is a fiction – but one that's very much based on documentary evidence and interviews, as it reveals a grubby story of secrecy, deceit, colonial attitudes and collusion. Britain even had to be evasive with the UN, creating the illusion that Diego Garcia had no permanent residents. The play takes its name from a 1966 memo sent by civil servant Sir Paul Gore-Booth that declared: "The object of the exercise is to get some rocks which will remain ours […] there will be no indigenous population except seagulls." To which a diplomat, Dennis Greenhill, replied: "Unfortunately, along with the birds go some few Tarzans and Man Fridays whose origins are obscure and who are hopefully being wished on to Mauritius."

Ironically, the US base on Diego Garcia is called Camp Justice. But then the function of stories and the shifting nature of truth are very much at the heart of A Few Man Fridays. "Chagos has become a paradise," says Jackson. "Every time the story is told, the ocean is bluer and the sands whiter. The reality is that it was a colonial outpost. The Chagossians were wage slaves. But it was better than many places. It was their place – and the longing they feel for it is very real."