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WELLINGTON -- The New Zealand government Monday announced it had secured a deal with Hollywood movie house 20th Century Fox Film and production firm Lightstorm Entertainment to make three sequels to the global box office hit Avatar in the country.

Prime Minister John Key shook hands with Canadian director James Cameron and other Hollywood executives on the memorandum of understanding (MoU), which would require spending of at least 500 million NZ dollars (413.05 million US dollars) on production activity in New Zealand, including live shooting and visual effects.

"The Avatar sequels will provide hundreds of jobs and thousands of hours of work directly in the screen sector as well as jobs right across the economy," Economic Development Minister Steven Joyce said in a statement.

"They will be a very big boost to the screen industry while we look to develop more New Zealand-sourced productions."

The MoU followed a separate announcement Monday by the government that it would boost screen production incentives for both overseas and New Zealand productions to encourage more film and TV to be made in New Zealand.

This included raising the baseline rebate of qualifying costs from 15 percent to 20 percent, while productions will get points for specific benefits to New Zealand, which could entitle some to an extra 5 percent rebate.

The new Avatar films would qualify for a total rebate of 25 percent, said Joyce.