Peter Jackson has officially signed on to direct The Hobbit.

After months of trouble for the Lord of the Rings prequel, Warner Bros., MGM and New Line Cinema have announced that production will begin in February 2011 under Jackson’s direction. Jackson directed all three Lord of the Rings films and is also writing and producing The Hobbit.

The Hobbit will be divided into two films, which will be filmed back-to-back in Digital 3-D.

“Exploring Tolkien’s Middle-earth goes way beyond a normal film-making experience,” Jackson said. “It’s an all-immersive journey into a very special place of imagination, beauty and drama. We’re looking forward to re-entering this wondrous world with Gandalf and Bilbo – and our friends at New Line Cinema, Warner Brothers and MGM.”

Director Guillermo del Toro (Pan’s Labyrinth, Hellboy) had originally been signed on to helm The Hobbit, but he announced in May that he would no longer be able to direct the project due to filming delays.

“Peter is a filmmaker of incomparable ability; having him return to Middle-earth to produce and direct is a dream come true,” said Toby Emmerich, president of New Line Productions. “A true original, Peter is a gifted story-teller, visionary director and pioneer in film technology.”

The announcement from Jackson and the studios is the first piece of good news surrounding The Hobbit in months.

Filming delays reportedly began when MGM, a studio behind The Hobbit, started running into financial troubles. Instead of financing film projects, including the next installment of the James Bond series, MGM has had to put money toward paying off its $4 billion debt.

Although MGM plans to file for bankruptcy, it is part of a deal that Spyglass Entertainment has made with MGM to take over the bankrupt studio’s management. MGM’s new management, along with Warner Bros.’s offer to loan MGM an estimated $500 million, has allowed filming for The Hobbit to resume.

But The Hobbit faces another obstacle: labor unions.

Warner Bros. and Jackson had hoped to film The Hobbit in New Zealand, where The Lord of the Rings films were shot, but the Screen Actors Guild and the New Zealand Actors’ Equity have placed a “do not work” order against the project. The unions claim The Hobbit is a non-union production because it does not acknowledge union jurisdiction for local actors. Warner Bros. is allegedly looking at five other locations to film The Hobbit if negotiations with the unions fail.

Although The Hobbit cast has yet to be finalized, The Office star Martin Freeman is a front-runner to play the coveted role of Bilbo Baggins. Along with Freeman, David Tennant (Doctor Who) and Michael Fassbender (Inglourious Basterds) are being considered for parts in the film.

Ian McKellen and Andy Serkis are also expected to be in The Hobbit, reprising their roles as Gandalf and Gollum, respectively

If all goes according to plan, the first installment of The Hobbit is expected to be in theaters in December 2012 followed by the second installment in 2013.