Britain is ready to offer a reunified Cyprus large swathes of British bases territory on the island in the event of a peace deal, Foreign Secretary Philip Hammond said Friday.

"We have made clear that in the context of a settlement, Britain is willing to offer to surrender a significant proportion of the landsurface of the bases to the Republic of Cyprus to allow development," Hammond told reporters after meeting his Cypriot counterpart Ioannis Kasoulides.

"That offer remains on the table, and we hope that it will add to the economic benefits of a settlement being concluded and help to stimulate economic growth in Cyprus in the future," he added.

Britain retains two strategically important military bases on Cyprus which remained sovereign territory after the country's independence in 1960.

Turkish troops occupied the northern third of Cyprus in 1974 in response to an Athens-inspired coup seeking union with Greece.

As part of a 2004 UN peace deal, London offered to cede around 50 percent of non-military bases land in the south, but Greek Cypriots in a referendum rejected the settlement blueprint.

Britain confirmed the offer still stands in the event of a peace accord being reached.

Long-stalled UN-brokered peace talks were launched on May 15.

Britain launched bombing operations against the Islamic State group in Iraq in September 2014 from its RAF Akrotiri air base on the south coast near Limassol.