Peter Jackson is adding a third film to what was planned to be the two-part series The Hobbit.
The director of the Oscar-winning Lord Of The Rings trilogy said that after viewing a cut of the first film and part of the second that he felt there was room for a third.
Jackson said in a statement that a lot of JRR Tolkien's tale of Bilbo Baggins would remain untold if a third film was not made.
Warner Bros and MGM will continue their partnership to make the three films.
The first instalment, The Hobbit: An Unexpected Journey, hits cinemas in December, while the second, The Hobbit: There And Back Again, is set for release in December next year.
The third film will come out in the summer of 2014.