Indian Affairs Minister Jim Prentice has turned down a request by the embattled Kashechewan reserve in northern Ontario to relocate within its traditional hunting grounds, reserve officials say.

Stan Louttit, grand chief for the Mushkegowuk Council, which is responsible for the Kashechewan reserve, told CBC News Friday that Prentice rejected the option of relocation as too costly and offered $200 million to redevelop the community at the current location.

"Disappointment" was how Louttit described his reaction, as he said relocation was the preferred option of the vast majority of the community's 1,700 residents.

In an interview Friday with the Canadian Press, Prentice said a new engineering report estimates it would cost about $474 million to move the reserve to higher ground — an option he called "prohibitively" expensive.

"If the situation is that the community wishes to stay in their traditional territory, then the most prudent option is the current Kashechewan site, where there's probably $150 million to $200 million of infrastructure in place already," Prentice said.

Louttit said the next step is for Kashechewan Chief Jonathan Solomon to go back to the community with this offer and decide how they will respond.

Earlier this month, Solomon said Prentice had balked at a report saying the community preferred to be relocated 30 kilometres upstream, within their traditional lands.

The report found a majority of residents wanted to move off the flood plain of the Albany River, where their homes have been repeatedly swamped during spring thaws.

It contradicted an earlier federal report recommending community members be moved to the city of Timmins, about 480 kilometres to the south.

Three evacuations since 2004

The federal report, prepared for Indian Affairs by former Ontario provincial government cabinet minister Alan Pope and released last November, recommended moving the reserve to the outskirts of Timmins to give community members access to hospitals, schools and employment.

Solomon has called on the Tories to honour a 2005 deal worth $500 million reached with the previous Liberal government to build a new community within their traditional hunting grounds in 10 years.

"It was approved and booked" by former finance minister Ralph Goodale, Liberal MP and former Indian Affairs minister Andy Scott told the Canadian Press Friday.

Prentice had repeatedly said the people could choose to relocate, but following the release of the survey earlier this month, a spokesperson for Indian Affairs told CBC News the cost projections had forced the ministry to take a second look.

Ottawa moved the community, against the residents' will, to the low-lying land in 1957.

Flooding and tainted water have prompted three evacuations since 2004.

The evacuations came as the community struggled with squalid housing, domestic violence, addiction and a number of reported suicide attempts.

Prentice himself has called conditions on the reserve "deplorable."

With files from the Canadian Press