Prime Minister Tony Blair said providing state help for Diego Garcians could set a precedent for more claims.
Some islanders have been left homeless at Gatwick Airport
He was responding to complaints by Epsom and Ewell Conservative MP Chris Grayling that his constituents were paying to house the Diego Garcians.
The islanders were exiled in the 1960s to make way for a US airbase but many have come to the UK.
One islander has won temporary housing while he fights for the right to be housed in the UK as a homeless person.
A High Court judge ordered Reigate and Banstead Borough Council in Surrey provide accommodation for Nicholas Antoine until Monday to give him time to launch the action.
He intends to seek permission to challenge the legality of the government's refusal to help the Diego Garcians.
The action affects a group of about 40 islanders, who all hold British passports, who arrived in the UK in October and have been sleeping rough at Gatwick Airport.
Mr Grayling raised the issue at question time.
Diego Garcia became a military base in the 1970s
He said: "Former residents of the island of Diego Garcia who were dispossessed under a previous Labour government have started arriving in the United Kingdom and are currently being housed at the expense of the residents of Reigate and Banstead in Surrey.
"Can you explain why my constituents in one small Surrey borough should be paying substantial housing and legal costs as a result of this and can be paying substantial housing and legal costs because of this?"
Mr Blair responded by saying: "I will look into this very carefully and get back to you but I think the concern has been if we start providing funding in these circumstances there is no reason why we shouldn't across the board."
But Mr Blair rejected claims by Mr Grayling that thousands more islanders would be arriving in the UK saying it was "an exaggeration".
The High Court has already ruled West Sussex County Council does not have a duty to pay for the islanders.
The authority said it had already paid out £500,000 on housing Diego Garcians who started arriving at Gatwick in 2003.