The makers of the smash hit "Lord of the Rings" films said on Tuesday they settled a legal dispute and agreed to make two movies based on J.R.R. Tolkien's "The Hobbit," but most likely without Peter Jackson directing.

Oscar winner Jackson, however, has signed on as executive producer along with his wife and producing partner, Fran Walsh, who also was instrumental in making the three "Lord of the Rings" films that earned $3 billion at global box offices.

In recent months, loyal "Rings" and Tolkien fans loudly proclaimed on Internet sites that they would not support a Hobbit movie without Jackson's involvement, and Tuesday's announcement brought them some welcome relief.

"Fist in the Air! YEEEEESSSSS!!! ... "TRUST PETER!!! THE MASTER, THE COMMANDER, THE WIZARD!," one person posted at fan site, theonering.net.

New Line co-chairman Bob Shaye said no decision has been made about who will direct the Hobbit movies, but Jackson, Walsh and the studios share approval on major creative elements and will start considering writers and directors in January.

MGM Chairman Harry Sloan, who was credited by all parties for bringing about the deal, said Jackson found it "impossible" to direct the films and meet proposed release dates in 2010 and 2011 due to other projects in the works.

"He can't get it scheduled and he doesn't want the fans to have to wait for the next two movies," Sloan said. He said the studios might postpone the films if Jackson changed his mind.

Ken Kamins, manager for Jackson and Walsh, said it was "highly unlikely" Jackson would write or direct, but he would insure their quality by keeping creative control.

Kamins pointed out that George Lucas had ceded director's duties to others for "The Empire Strikes Back" and "Return of the Jedi" without damaging the "Star Wars" franchise.

Jackson was unavailable for comment.