Mexico's del Toro confirmed to direct The Hobbit

Confirming long-held rumours, New Line Cinema has announced that Guillermo del Toro will helm the upcoming two-film adaptation of J.R.R. Tolkien's The Hobbit.

The studio behind the epic, Oscar-winning The Lord of the Rings trilogy also announced Thursday that the Mexican director will move to New Zealand for the next four years to produce the films concurrently (in the same way  LOTR was completed).

There, he will work with LOTR mastermind Peter Jackson, who will serve as executive producer of The Hobbit.

"Contributing to the Lord of the Rings legacy is an absolute dream come true," del Toro said in a statement.

The 43-year-old del Toro has previously blended surreallist horror and fantasy in his films, including in his dark, Oscar-winning fairy tale Pan's Labyrinth, as well as the budding film franchise based on the Hellboy comics. Other credits include Blade II and Mimic.

Dispute delayed Hobbit project

After the massive success of the Lord of the Rings films, director Jackson had been expected to return to Tolkien's Middle Earth realm to tackle The Hobbit, a precursor to the LOTR trilogy.

However, the plans fell through when he and New Line became embroiled in a compensation dispute. In December 2007, the two sides announced they had settled their differences and the New Zealand filmmaker had agreed to serve as producer for The Hobbit.

In the meantime, del Toro's name was rumoured for the director's chair on internet discussions. British actor Ian McKellen, who portrayed the wizard Gandalf in Jackson's trilogy, often stoked the rumours when he discussed wanting to reprise his role in the Hobbit films.

"Peter and Fran Walsh" — Jackson's partner and collaborator — "have told me they couldn't imagine The Hobbit without their original Gandalf," McKellen said on his website in March.

"Their confidence hasn't yet been confirmed by the director Guillermo del Toro, but I am keeping my diary free for 2009!" McKellen added.

The two Hobbit films are tentatively set for release in 2010 and 2011.