
A Foreign Office spokesperson said ministers had been working to find a solution which protects the welfare of migrants and "the integrity of British territorial borders".
Relocating the most vulnerable migrants while their legal claims are processed would offer them "greater safety and wellbeing", the spokesperson said.
The offer to the migrants, by British officials on the island on Tuesday, came after the UK announced it was handing sovereignty of the British Indian Ocean Territory (Biot), which includes Diego Garcia, to Mauritius. The military base, however, will remain on the island.
The BBC gained unprecedented access to Diego Garcia last month to attend a court hearing over whether the group had been unlawfully detained in a small fenced camp, which is guarded by private security company G4S.
A judgement in the case is expected soon.
The British government has argued that the refugee convention is not in force on Biot because it is "constitutionally distinct" from the UK, though it is administered from the Foreign Office in London.
Instead, the Biot administration established a separate process to determine if the Tamils could be returned to Sri Lanka or be granted international protection - which the UN says is akin to refugee status.
There are currently 56 Tamils still on Diego Garcia. A further eight are currently in Rwanda after being transferred there for medical care after self-harm or suicide attempts.
Most of the migrants are awaiting decisions on their international protection claims or appealing rejections. In total, eight have been granted international protection.