The 85 children from Lake St. Martin First Nation were among hundreds of community residents who were taken to Winnipeg after severe flooding in the spring of 2011.
The kids have been going to school together in a rented building in Winnipeg, leased by the federal government. But the building was found by city fire officials last week to have violated fire code regulations.
In a written statement, the department of Aboriginal Affairs and Northern Development said it had to ensure the kids could continue their education.
The children are now going to different public schools — a move that has upset the Assembly of Manitoba Chiefs.
In a letter to the federal government, Grand Chief Derek Nepinak said the children will no longer have a "culturally relevant education experience" and will suffer discrimination in the public school system.