The homeowners, many in properties worth more than $1million, had believed they had unrestricted freehold title to the land. But despite knowing of the problem for three years, the state Government has still not informed the residents that they are on Aboriginal land.

Told of the possibility of the claim by The Australian, some residents said they feared losing their houses, or that members of the Aboriginal community would be able to camp on their land, light campfires and hunt goldfish in their ponds.

While the state Government has not publicised their location, The Australian has indentified the affected blocks, covering a land release known as Five A.

The move by the Kimberley Land Council represents a sharp escalation in the battle for land rights around Broome.

Traditional owners are angry that the Government, while saying it wants to negotiate a settlement, has decided to challenge a Federal Court decision granting native title to 5200sqkm in the Kimberley.

In April, judge Ronald Merkel granted the 2500 Yawuru people most of their claim, including prime land in and around Broome. But Deputy Premier Eric Ripper this month said the Government had problems with the decision and would appeal to the full bench of the Federal Court.

"It was like somebody reached into your chest and squeezed your heart," Mr Bergmann said.

"There's been a massive loss of goodwill."

Justice Merkel excluded the 140 blocks from his decision. He said it was an "absolute scandal" that the house owners were not represented and that the Government had not reached a compensation deal with the traditional owners.

The anomaly of the blocks dates from 1993, when the Court Liberal government released them under the Western Australian Native Title Act and sold them throughout 1994. In 1995, the High Court found the act was invalid, meaning that native title still applied to the blocks, and subsequent governments have failed to rectify the problem.

The Merkel decision found that freehold and native title both applied to the blocks, and it has prompted speculation in Broome over whose houses are affected.

Retiree Iris Peter and husband Geoff bought a $720,000 house on Smirnoff Place, in Five A, last August but said they would not have made the purchase had they known it was on Aboriginal land.

"We have bought a block of land with a house on it and it's basically not ours any more because of a judge's decision," she said.

Neighbour Steve Kesich, an architect, criticised the Government. "To me, it was very badly orchestrated on the state government side," he said.