As we reported earlier, rumours of a 3D Hobbit movie directed by Peter Jackson have been doing the rounds on the web. While we had every expectation that New Line would see sense and ensure Jackson’s involvement in the project we weren’t holding our breath until an official announcement was made. Well the good news is that New Line and Peter Jackson have settled their differences over the calculation of box office receipts for The Fellowship of the Ring and Jackson has signed on for not one but two movies. Where rumour and fact part company is that rather than directing Jackson will be serving as executive producer and there's no word yet on whether either movie will be released in 3D.

So how closely will the Hobbit films follow J.R.R. Tolkien's book? And why two rather than one?

According to the press release, the first film will be a direct adaptation of The Hobbit, a prequel to the Lord of the Rings, in which Bilbo Baggins (played by Ian Holm in Jackson’s Trilogy) is encouraged by Gandalf (Ian McKellan) to go on a dragon-slaying adventure with a band of dwarves. A seemingly inconsequential adventure along the way has Bilbo find a magical ring and encounter Gollum (Andy Serkis). Of course, we later discover that the ring is in fact the One Ring of Sauron, Lord of the Rings.

Based on footnotes from The Hobbit and information in the appendices of The Lord of the Rings, the second movie will apparently be set during the six decades between events of The Hobbit and the Lord of the Rings. While it will presumably fill in the gaps, it also provides ample opportunity for the return of familiar characters from the Trilogy who do not play a role in The Hobbit: Aragorn, Frodo, Sam, Merry and Pippin, Legolas, Gimli, the men of Rohan and Gondor, the elves of Lothlorien. It remains to be seen who returns for the Hobbit movies but it’s almost certain that Aragorn (Viggo Mortensen) will take part as his character worked closely with Gandalf at this time.

New Line and Jackson plan to shoot both movies back-to-back as they did with the three Lord of the Rings movies. If principal photography commences in 2009 as scheduled, The Hobbit will be released in 2010 and its sequel in 2011.

Both Sam Rami, director of Spiderman, and Guillermo del Toro, director of Pan's Labyrinth, are rumoured as possible directors of the films. Rami has already turned down Spiderman 4, perhaps indicating just how eagre he is to direct The Hobbit by ensuring his availability should it be needed, or in fact unofficially signalling that he has already been offered the role.

Peter Jackson is currently completing postproduction on the The Lovely Bones, due out in 2009.