Downing Street has denied that a deal with Mauritius to hand over control of the Chagos Islands is in peril after the new Mauritian prime minister said the arrangement as it stood was not beneficial to his country.

The agreement, under which the UK would hand over its final African colony while keeping control of the UK-US military base on the island of Diego Garcia for at least 99 years, was reached in October with the previous Mauritian administration.

But Navinchandra Ramgoolam, who returned as prime minister for a third term after a general election in November, subsequently ordered a review of the deal signed by his predecessor, Pravind Jugnauth.

Speaking to his country’s parliament on Tuesday, Ramgoolam said a meeting with UK officials last week had involved Mauritius seeking better terms.

“Mauritius made clear that, while it is still willing to conclude an agreement with the United Kingdom, the draft agreement which was shown to us after the general elections is one which, in our view, would not produce the benefits that the nation could expect from such an agreement,” he said.

“Therefore, Mauritius accordingly submitted counter-proposals to the UK so that an agreement which is in the best interest of Mauritius can be concluded. The response of the United Kingdom to our counter proposals was received yesterday afternoon and is now being currently considered.”

Asked if the deal was unravelling, Keir Starmer’s official spokesperson said: “I wouldn’t characterise it like that at all. As you know, there has been a change of leadership in Mauritius. It makes sense that we would engage with the new administration on the details of the deal, and that’s what we are doing.”

He added: “Our position on the deal, which hasn’t changed, is that the government inherited a situation where the long-term secure operation of the military base at Diego Garcia was under threat through contested sovereignty and legal challenges, including through various international courts and tribunals.

“The agreement we’ve struck with Mauritius protects the long-term secure operation of the UK-US base, which plays such a crucial role in regional and international security.”

The spokesperson said work was being done with the new Mauritian government about “details of the deal”, but declined to say what these may concern.

The Conservative opposition in the UK has criticised the deal as an unnecessary surrender of sovereignty, which could allow China greater influence in the region. The government has noted that discussions about the deal began under the Tories.

There are also concerns that Donald Trump would block the deal. His pick for secretary of state, Marco Rubio, warned the agreement posed “a serious threat” to US national security by ceding the islands to a country allied with China.

Ministers in the UK have said that uncertainty over the islands’ legal status threatened the base’s operation and that the deal had support from across the US security system. Joe Biden’s administration has offered its public backing to it.