PETER JACKSON and New Line Cinema have reached agreement to make JRR Tolkien’s The Hobbit, a planned prequel to the blockbuster trilogy The Lord of the Rings.

Lord of the Rings executive producer Bob Shaye insists director Peter Jackson will be involved in The Hobbit.

Head of film studio New Line Bob Shaye insists 'The Lord of the Rings' Oscar winner Peter Jackson will never be allowed to direct 'The Hobbit' while he is at the company.

Oscar winner Peter Jackson has hit back at New Line boss Bob Shaye, blaming the studio's lack of co-operation as the reason he has filled a lawsuit against them.