Sir Peter Jackson says he will consider directing The Hobbit if it is the only way to save the movie's production after the shock resignation of director Guillermo del Toro yesterday.

Del Toro said the decision to quit the The Lord of the Rings prequel was "the hardest decision" he'd ever made but repeated delays were affecting his commitments to other films.

"It was more a factor of the other commitments asking for a start [time] than The Hobbit needing a date to start," he told the Dominion Post.

Del Toro was hired in 2008, when the goal was for part one of The Hobbit to be released this year. Now the earliest likely release date is 2012.

The movie has been stymied by the financial woes of its backers.

MGM co-owns the rights to a feature film version of The Hobbit with New Line Cinema - the studio that made the LOTR trilogy - but MGM has been put up for sale with a reported US$3.7 billion in debt and potential for assets, such as the franchise on the James Bond movies, or the Pink Panther to be sold off piecemeal.

"We have been caught in a very tangled negotiation," Del Toro said last week, when he told journalists that uncertainty surrounding MGM's future meant that The Hobbit had no official "green light" and could not progress.

Jackson told the newspaper he was saddened by del Toro's departure, which was "amicable".

Del Toro would continue as a Hobbit screenwriter.

Jackson met studio representatives yesterday to begin the search for a new director for the US$150 million (NZ$219m) film, but wouldn't rule out directing The Hobbit himself if a suitable person could not be found.

"If that's what I have to do to protect Warner Bros' investment, then obviously that's one angle which I'll explore," he said.

But stepping in as director would be difficult as he had signed writer and director contracts with Hollywood studios for two other films, with one likely to begin next year.

"The other studios may not let me out of the contracts."

Jackson said November was now the earliest start date for shooting, but it depended on finding the right director.

"I just don't know now until we get a new director. The key thing is that we don't intend to shut the project down.

"We don't intend to let this affect the progress. Everybody, including the studio, wants to see things carry on as per normal. The idea is to make it as smooth a transition as we can."