A film version of JRR Tolkien's novel The Hobbit is to go ahead after its producers settled a legal row with the author's heirs.

They sued New Line Cinema for a reported $220m (£133m) in compensation, based on breach of contract and fraud.

The suit claimed the US company failed to pay royalties due after the success of the Lord of the Rings trilogy.

Its settlement, for an undisclosed sum, paves the way for director Guillermo del Toro's two films based on the book.

New Line plans to release The Hobbit in 2011, followed by another movie drawing from other Tolkien works.

Alan Horn, president of the studio's parent company Warner Bros Entertainment, said the firm was "pleased to have put this litigation behind us".

"We all look forward to a mutually productive and beneficial relationship in the future," he added.

Source: Press Release