British cabinet minister Michael Gove is preparing a proposal to take residences off business tycoons close to Russian President Vladimir Putin without paying compensation, the Financial Times reported.

Gove is proposing that Ukrainians forced to flee their homes due to Russia's military operation be housed in the luxurious residences of sanctioned oligarchs, the newspaper sources said.

The British prime minister, whom the Labor Party accuses of taking insufficient action against people close to Putin after the start of the military operation in Ukraine, supports Gove's plans to seize the land and property of sanctioned oligarchs, they said.

Government lawyers, however, have concerns that the plans would face legal challenges.

No final government decision on the proposals of Gove, who serves as Secretary of State for Levelling Up, Housing and Communities, as well as Minister for Intergovernmental Relations, has not yet been made, the FT said.

Gove's plan involves nine Russian oligarchs hit by British sanctions, including Kirill Shamalov, Russia's youngest billionaire and Putin's former son-in-law, the sources said. Earlier, the UK government proposed to freeze their assets in the country and ban them from entering.

British Foreign Secretary Liz Truss has said she has drawn up a "hit list" of Russian oligarchs, and said the government would impose new sanctions on them every few weeks.