Tolkien fans and at least one potential cast member expressed frustration to news that director Peter Jackson would not be making a film based on The Hobbit and a second Lord of the Rings prequel.

More than 8,000 fans want Jackson to be reinstated as director for planned films and have signed an online petition on theonering.net, the fan site devoted to the works of The Lord of the Rings and Hobbit author J.R.R. Tolkien.

Sir Ian McKellen, seen here in 2003, expressed sadness that The Lord of the Rings director Peter Jackson would not be taking part in two planned prequels to the trilogy.
(Associated Press)

Theonering.net posted a letter by Jackson and partner Fran Walsh on Sunday saying the two were no longer part of New Line Studio's plans to make the film.

The Oscar-winning director blamed a dispute over profits from the highly successful Lord of the Rings trilogy.

Actor Sir Ian McKellan, who played the role of Gandalf in the trilogy and was widely tabbed to reprise his role in the prequels, also expressed disappointment over the news.

"I'm very sad as I should have relished revisiting Middle Earth with Peter again," the actor wrote on his website. "It's hard to imagine any other director matching his achievement in Tolkien country."

While Jackson said in his letter he is off the Hobbit project, the issue appears far from closed, in part because of the complicated ownership rights to the film.

While New Line Cinema owns the rights to produce the films, Hollywood studio MGM owns the distribution rights.

An MGM spokesman told Variety magazine "the matter of Peter Jackson directing The Hobbit films is far from closed."

A door may also open for Jackson to return if New Line fails to start the project before their rights expire next year, which is the main reason they were said to be looking elsewhere for a director, according to Jackson.

Next year, New Line's rights to the film revert to producer Saul Zaentz's Tolkien Enterprises, the original owner of the film rights to the books. Zaentz told German film magazine Cinema last week that Jackson would be shooting the film.

Zaentz, who produced such films as Amadeus, The English Patient and One Flew Over the Cuckoo's Nest, bought the rights to Tolkien's books in 1976 when he made an abortive animated version of the trilogy with director Ralph Bakshi.