Plans to shoot The Hobbit at Leavesden Studios have been scuppered, according to reports.

Several entertainment websites are claiming the Lord of the Rings prequel will now be filmed in New Zealand, after a deal was reached with the country’s government and studio Warner Brothers over increased tax breaks and changes in labour law.

Rumours the movie would be filmed at Leavesden Studios were fuelled last week, when it was claimed that director Sir Peter Jackson's wife Fran Walsh, who co-produces the film, had told a New Zealand radio station it could be shot there.

But New Zealand's Prime Minister John Key has confirmed both parts one and two will be shot in the country in a move which would help "safeguard" jobs.

In a statement he said: "I am delighted we have achieved this result.

"Making the two 'Hobbit' movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the 'Lord of the Rings' trilogy in once again promoting New Zealand on the world stage."

Three Rivers District Councillor Stephen Giles-Medhurst, whose ward is Leavesden, expressed his frustration at the news The Hobbit would not be filmed at the studios.

The Liberal Democrat representative said: It’s obviously very disappointing that the film will no longer be shot at Leavesden Studios.

"It was a golden opportunity to promote the area and Hertfordshire.

“But I’m sure there will be plenty of other opportunities in the future, especially with regard to filming, as Warner Brothers is set to take over the studios next week.

“There is also of course the Harry Potter exhibition, which I am sure will help put us on the map.”