The film adaptation of The Hobbit could become the most expensive movie of all time and may be just days away from getting the green light to start shooting.

The Hollywood blockbuster - a prequel to The Lord of the Rings trilogy and planned to be shot in New Zealand for the last decade - is expected to cost US$500 million ($662 million) and has already racked up legal fees believed to exceed $100m, Australian website reported.

The most expensive movie to date was Pirates of the Caribbean: At World's End, which cost US$300 million.

The film's soaring costs are mostly due to settlements with rights holders, whose wrangles with Warner Bros/New Line Cinema could have delayed shooting for another decade, the website reported.

Sir Peter Jackson's New Zealand company, Wingnut Films, is waiting for the green light for its planned adaptation.

Last week sources at Warner said they were hoping to approve production in the next few days and that development and shooting costs were "close to or around $500m".

The four-hour epic would be shot in high-definition and 3D.

The movie's producers and actors' unions have so far failed to resolve differences over a collective contract for actors in New Zealand.