Martin Freeman to play Bilbo Baggins in Watford

After weeks of speculation it has been confirmed that actor Martin Freeman is to play Bilbo Baggins in Peter Jackson's latest two-part Middle Earth epic, The Hobbit.

Announcing his decision, the Kiwi director said there had "only ever been one Bilbo Baggins for us" and described the 39-year-old British actor as "intelligent, funny, surprising and brave - exactly like Bilbo".

After landing the biggest role of his career to date, Freeman may have been hoping to cast off the shackles of his breakthrough role as lovelorn paper salesman Tim in British comedy The Office. But he might find that Middle Earth is rather closer to Slough, where that series was set, than he was expecting.

Plans to film The Hobbit in New Zealand, where the Lord of the Rings movies were made, have been thrown into doubt over disputes with acting unions, and Jackson and film company Warner Bros are now considering switching the production to England.

Jackson's wife and co-producer, Fran Walsh, told Radio New Zealand that Warner were keen on moving production to Leavesden Studios, near Watford, where the Harry Potter movies were filmed.

Equity NZ blacklisted The Hobbit in a row over terms and conditions, and although the ban, which was supported by British Equity and the Screen Actors Guild in the US, has now been lifted, Jackson was so angry that he no longer wishes to film in his homeland.

Since then locations in Canada, Scotland and Eastern Europe have all been mooted, but Watford appears to be the most likely option.

Losing The Hobbit would be a massive blow for the New Zealand film industry, which was built up from nothing by the Lord of the Rings trilogy. Such is the importance of the film that New Zealand's prime minister John Key has even intervened. He said it would be a "tragedy" if the movie was made outside the country.

In the first part of the JRR Tolkein adaptation, due out in December 2012, Freeman's character ventures to the Lonely Mountain with a group of dwarves to reclaim treasure stolen by the dragon Smaug.

Spooks actor Richard Armitage will play the leader of the dwarves, Rob Kazinsky who appeared in EastEnders and Being Human star Aidan Turner will also play dwarves.

Cate Blanchett and Hugo Weaving are expected to appear in the film, while Ian McKellen and Andy Serkis are likely to reprise their roles from the Lord of the Rings films as Gandalf and Gollum. ·