Guillermo del Toro has officially signed up to direct The Hobbit, according to reports leaking out from a film premiere in France. The Pan's Labyrinth creator will oversee a double-bill of films based on JRR Tolkien's fantasy adventure, which paved the way for The Lord of the Rings. Peter Jackson, director of the Oscar-winning Rings trilogy, will serve as executive producer.

The announcement was made at last night's French premiere of The Orphanage, a Spanish horror film that Del Toro helped produce. Introducing the film-maker, the host told the audience: "Today is a big day because we are announcing what everyone wanted to hear, which is that he will be directing The Hobbit." Del Toro had previously been reported to be in negotiations to take charge of the project.

The Hobbit charts the adventures of the hobbit Bilbo Baggins, who joins a band of dwarves on their mission to liberate their treasure from a dragon's lair. Along the way, Baggins takes possession of a magical ring of invisibility. The ring is later revealed to be the chief weapon of the dark lord Sauron. The author devised this twist after completing the original tale, laying the ground for his famous Lord of the Rings trilogy of novels.

The Hobbit films will be backed by New Line with a reported budget of $150m (£78m). Production begins next year, with the pictures following in 2010 and 2011.