TWO films based on Oxford author JRR Tolkien's novel The Hobbit are to go into pre-production in the new year.

The films will be produced by Peter Jackson, who directed the blockbuster The Lord of the Rings trilogy.

The Hobbit, published in 1937, tells the story of Bilbo Baggins, and his quest for treasure, set before the events of The Lord of the Rings.

It also features Gandalf, the wizard played by Sir Ian McKellen in the three Rings movies, The Fellowship of The Ring (2001), The Two Towers (2002), and The Return of the King (2003).

The two Hobbit films will once again put Oxford on the cinema map - and could prove another boost for tourism in the city.

And there is the possibility that two Oxford-related blockbusters could go head-to-head in the cinemas if sequels to The Golden Compass, based on Cumnor author Philip Pullman's His Dark Materials trilogy, are given the go-ahead.

Although a film based on The Hobbit was almost inevitable after the success of the Rings movies, a legal wrangle between Jackson and New Line Cinema - the company behind the films - had seemed to mark the end of Jackson's involvement in bringing Tolkien to the big screen.

But after settling litigation, Peter Jackson and Rings collaborator Fran Walsh will be executive producers of the two Hobbit films - one based on the book, another a 'sequel', details of which are not yet available.

Both movies will be filmed at the same time, with pre-production starting shortly and main shooting beginning in 2009, and release dates pencilled in for 2010 and 2011.

Sir Ian McKellen - who voices the armoured bear Iorek Byrnison in The Golden Compass - has already said he would be keen to play Gandalf again in any Hobbit film. But no cast details, or news on who will direct the films, have been announced.

Peter Jackson said: "We are delighted to continue our journey through Middle Earth."

Bob Shaye, New Line co-chairman, said: "We are very pleased we have been able to resolve our differences, and that Peter and Fran will be actively and creatively involved with The Hobbit movies.

"We know they will bring the same passion, care and talent that they so ably accomplished with The Lord of the Rings trilogy."

The three films grossed almost $3bn worldwide at the box office and at the Oscars in 2003, The Return of the King won all 11 categories in which it was nominated - including Best Picture.

If the Hobbit films are released around Christmas time - as the Rings films were - and if the next two books in Pullman's trilogy - The Subtle Knife and The Amber Spyglass - are filmed and released, Christmas 2010 and 2011 may be very good for fans of Oxford fantasy fiction.

And they could even be competing with adaptations of Narnia books by fellow Oxford author CS Lewis - Prince Caspian is due for release next May after the success of the 2005 movie The Lion, the Witch and The Wardrobe.

The city is set to benefit from tours based on The Golden Compass next year. And a new version of Evelyn Waugh's Brideshead Revisited has recently been filmed in here.