According to multiple sources, Prime Minister John Key has announced that "The Hobbit" will be filmed in New Zealand ending a dramatic showdown between the Kiwi nation and Warner Bros.

“I’m please to announce an agreement has been reached between the New Zealand Government and Warner Brothers to enable the two 'Hobbit' movies to be directed by Sir Peter Jackson, to be made New Zealand," Key said according to 3 News. "Making the two movies here will not only safe guard work for thousands of New Zealanders but will also allow us to follow the success of the 'Lord of The Rings' trilogy and once again promoting New Zealand on the world stage."

Key said the Government will pass legislation to clarify WB's concern over distinguishing independent contractors and employees in the movie industry.

“It is this clarification that will guarantee the movies are made in New Zealand," Key says.

The PM also announced that "The Hobbit" will receive a $15 million (New Zealand dollars) rebate for each film.  He also revealed the film will premiere in New Zealand and the country plans a major tourism campaign to coincide with the picture's opening.

The location of "The Hobbit" was in question after International labor unions threatened to blacklist the production in order to force New Zealand actors to form a union.  When Peter Jackson revealed Warner Bros. was seriously considering moving the production to London, Canada or Eastern Europe, the unions backed down, but the studio didn't.  With executives arriving this week to meet with Key to discuss financial incentives to stay, thousands of Kiwis met them with protests.

HitFix has reached out to Warner Bros. for comment and will update accordingly.