Calls byLord of the Ringsfans for director Peter Jackson to be allowed to make a version of The Hobbit have been given a boost by the owner of the film rights.

Movie mogul Saul Zaentz, 85, has said the film rights to The Hobbit will revert in 2009 to his holding company, Tolkien Enterprises and it "will definitely be shot by Peter Jackson," the Daily Telegraph reported.

Zaentz has owned the worldwide film, stage, and merchandise rights to Lord of the Rings and The Hobbit since 1976, but three years ago licensed the rights for a limited time to New Line Cinema, which produced the Lord of the Rings.

In an interview from Italy, Zaentz told the New York Times that Jackson should be the one to direct The Hobbit.

"We would like to see it done, of course with Peter Jackson," he said. "He's the right guy".

"I suppose that Peter will wait because he knows that he will make the best deal with us. And he is fed up with the studios," Zaentz added.

Hollywood is a labyrinth of complicated royalty deals created by producers passing projects on to others while retaining profit-sharing rights and New Line has an option to produce The Hobbit until 2009.

But another studio, MGM, separately owns the distribution rights to The Hobbit, and has said it expected to partner with New Line in financing The Hobbit.

MGM said it supported Peter Jackson as a filmmaker, and believed that when the dust settled, he would be making the movie.

After the nearly $NZ2.9 billion ($A2.52 billion) global box office success of the Lord of the Rings law suits have flown.

Zaentz who alleged New Line cheated him out of $US20 million ($A25.58 million) from the blockbuster trilogy settled with the studio last year for an undisclosed amount.

But a similar complaint from Jackson - after he was unable to get New Line to submit to an independent audit of its books for The Fellowship of the Ring - resulted in New Line holding the Hobbit movie hostage to his lawsuit, the New York Times reported.

Jackson last week posted a letter on theonering.net website announcing that he had been dumped by New Line from The Hobbit.

The New York Times reported that earlier this month Jackson declined to contribute a video salute to New Line for the celebration of the 40th anniversary of its founding, planned for next year.

Only days later, a New Line executive called Mr Kamins to say that the studio would be seeking another director for The Hobbit.

The row has become a major topic on Internet fan sites, with thousands of fans asking New Line to back down, and theonering.net has been among many websites calling for a boycott of any Hobbit film not made by Jackson.

New Line declined to comment on The Hobbit, but said in a statement to the New York Times that the situation was complicated by the lawsuit of Jackson's company, Wingnut Films, against the studio. (NZPA)