The Hellboy auteur has walked away from work on the Lord of the Rings prequel, based on J.R.R. Tolkien's first book, and blamed his decision to quit the project on the ongoing delays.
The production has been put on hold indefinitely because of the problems facing the MGM movie studio - the company behind The Hobbit has spiralled into debt in recent years and was put up for sale in 2009, but has so far failed to find a buyer.
Jackson, who directed all three previous Lord of the Rings films, will act as a producer on The Hobbit and was expected to be favourite to take over as director following the departure of Del Toro.
But his manager Ken Kamins insists the director is already booked up and won't be able to commit to the film.
He tells Deadline.com, "Peter has and has had obligations and commitments to other films that would make it impossible for him to direct The Hobbit at this time, even if it was offered, which it hasn't been. I've been quietly working on setting up a film for him to direct while Guillermo would have been directing The Hobbit... All of that said, Peter's commitment to The Hobbit is total and (he) will do everything necessary to protect the franchise and the investment made by New Line, Warners and MGM."