In a letter posted on Theonering.com., Jackson and partner Fran Walsh said an executive from New Line Cinema had called to tell them the studio was moving ahead with "The Hobbit" without him.

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The announcement came amid an ongoing dispute between Wingnut Films and New Line Cinema over the amount Jackson was paid for "The Fellowship of the Ring," including DVD payments.

While Jackson hasn't said how much he believes he was underpaid, The New York Times last year quoted his lawyers as saying it was as much as $100 million. He is suing New Line Cinema over the shortfall.

The Dominion Post newspaper quoted Jackson as saying that because he and Walsh didn't want to discuss upcoming movies "until the lawsuit is resolved, the studio is going to have to hire another director."