A 700,000-year-old hobbit has been discovered by a team of Australian-led researchers on the Indonesian island of Flores, shedding new light on human evolution.

Key points: Researchers found six teeth and a jaw bone fragment

Researchers found six teeth and a jaw bone fragment The remains are about 600,000 years older than another hobbit found on the island

The remains are about 600,000 years older than another hobbit found on the island The findings may suggest a case of evolutionary reversal

The dwarf-like ancient relative of modern man stood just one metre tall and has been dated at half a million years older than a hobbit found on the island a decade ago.

Published in the journal Nature, the researchers argue their fossil find descended from Homo erectus, which would suggest an incredible case of evolutionary reversal where human bodies — including brains — actually shrunk.

The University of Wollongong's Gert van den Bergh led the team who found the fragments.

He suggested that shrinking may have occurred because they were marooned on the island in a simple ecosystem with few predators, where perhaps they did not need such a big brain.

"But what is clear is that they made stone tools, so they weren't stupid," he said.

Found at a site called Mata Menge in central Flores, the jaw fragment and six teeth were from at least one adult and two children.

Griffith University archaeologist Adam Brumm described the island Flores as an experiment in natural evolution.

"There were earlier forms of humans that reached these islands — these were people that had technology, they had stone tools, they had the intelligence to make tools like our early ancestors.

"But that was not enough to protect their bodies from shrinking in size, just as occurred to elephants that also ended up in this remote island."

Researchers found six teeth and a jaw fragment of the hobbit. ( Supplied )

Dr van den Bergh said the discovery was significant because the fossils were much older than the previous hobbit find at Liang Boa, known as Homo floresiensis.

"The remains from Mata Menge, they are more than half a million years older than Homo floresiensis — almost 600,000 years older than the hobbit remains from Liang Boa," he said.

"We know that humans were present on the island 1 million years ago and that's based on dated stone artefacts."

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By dating the layers of rock above and below the fossil find, researchers were able to work out the general age of the ancient discovery.

Homo floresiensis was discovered in 2004 — around the same time as the release of the Lord of the Rings movie trilogy — and has caused turmoil in the scientific community ever since.

"It was such a strange creature — only a metre tall with such a tiny brain and a mixture of primitive and advanced characteristics — and nobody really knew for sure what it was or what we should conclude," Dr van den Bergh said.

An aerial view of Mata Menge where the remains were found. ( Supplied: Nature )

Dr van den Bergh said there were several hypotheses about the find, including that it was a dwarfed version of Homo erectus or that it came from a tinier, earlier ancestor like Homo habilis.

"The problem with that hypothesis was that those creatures have never been found outside Africa," he said.

"Now these new finds show that 700,000 years ago the ancestors of Homo floresiensis were already as small as the hobbit itself and secondly it provides a link between Homo erectus and Homo floresiensis."

Know your ancestors: HOMO ERECTUS Lived 1.6 million – 100,000 years ago

Lived 1.6 million – 100,000 years ago Brain size: Average 1,050 cubic centimetres

Brain size: Average 1,050 cubic centimetres Fossils of these short and stocky humans, with their distinctive skull shape and large brow ridges, have mostly been found in China and Indonesia HOMO FLORESIENSIS Lived 190,000 – 50,000 years ago

Lived 190,000 – 50,000 years ago Brain size: Average 380 cubic centimetres

Brain size: Average 380 cubic centimetres Conflicting interpretations and debates surround the remains of these tiny humans from Indonesia. Homo floresiensis are not our ancestors but their unusual features and recent survival suggests our human family tree is more complex than once thought HOMO HABILIS Lived 2.3 - 1.5 million years ago

Lived 2.3 - 1.5 million years ago Brain size: Average 610 cubic centimetres

Brain size: Average 610 cubic centimetres The earliest of our ancestors to show a significant increase in brain size and also the first to be found associated with stone tools

An independent reviewer for the Nature journal, Aida Gomez-Robles from George Washington University's Department of Anthropology, backs the link between Homo erectus and Homo floresiensis.

"[However,] there is still a lot of debate about this," Dr Gomez-Robles said.

"Even if I think these fossils descended from Homo erectus, there are other people who think they are descended from Homo habilis."

One of the dissenting voices is ANU biological anthropologist Colin Groves, who believes there are not enough fossils to confirm a link to Homo erectus.

"I tend to be of the other school of thought, that thinks that it was descended from something like Homo habilis, which was a species that lived in Africa from about 2.3 to 1.4 million years ago," Professor Groves said.

"It was a small-sized species with a fairly small brain and rather idiosyncratic-looking teeth, relatively long arms, and short legs.

"It distributed itself around the tropical old world sometime after 2 million years ago — we don't know when — and eventually ended up on Flores about as far east as any pre-modern human did."

The only way to confirm the find is to find more fossils such as wrist bones and skulls, an exciting search that these researchers are more than ready for.

"There are many other islands in this region east of Bali and in between Asia and Australia that could contain early humans of entirely unknown forms, and no-one's even looked for the bones of these creatures," Dr Adam Brumm said.