Peter Jackson, director of The Lord of the Rings trilogy, and Microsoft have announced a halt to plans for a movie based on the popular video game Halo.

The announcement Wednesday comes less than two weeks after the film’s major studio backers, Fox and Universal, pulled out of financing. Pre-production had already begun at Weta, the New Zealand-based company run by Jackson and his partner, Fran Walsh.

"At this time Microsoft, Peter Jackson and Fran Walsh have mutually agreed to postpone making a feature film based on the Halo video game," Microsoft said in a statement.

"While it will undoubtedly take a little longer for Halo to reach the big screen, we are confident that the final feature film will be well worth the wait," the company said.

The film was due to be released in 2008.

Fox and Universal pulled out in mid-October after trying to renegotiate the film’s budget and Jackson’s take of the profits.

Jackson working on other projects

The original budget was pegged at about $135 million US but reports say it could balloon to $200 million US.

At the time the two studios pulled out of the project, both Microsoft and Jackson released statements saying they would forge ahead, based on the software company’s video game. A Weta spokesperson also said at the time that work was continuing on the film, although no crew or stars had been cast.

The game concerns future super-soldier Master Chief as he battles to save mankind from an alien race. A sequel is expected next year for Microsoft's video game console Xbox 360.

Jackson is currently working on the adaptation of Alice Sebold’s book The Lovely Bones, and a remake of the 1954 Second World War battle drama, The Dambusters.