The end of the Hobbit films controversy may be in sight, with New Zealand Prime Minister John Key indicating that he hopes to see the dispute resolved in the next week or so.

At his post-Cabinet press conference on Monday, Key said he understood Economic Development Minister Gerry Brownlee had met the various parties late last week.

"I wouldn't want to predict an outcome there but we are all hopeful that we will get the right result, and that is that those Hobbit movies are made in New Zealand," Key said.

The New Zealand Actors' Equity union said at the weekend it was "hopeful" the spat could be resolved.

At his press conference, Key warned that despite widespread hope, a deal was still not guaranteed. "They are still undergoing quite tense negotiations.

Jackson has threatened to move his latest of the Tolkien saga from New Zealand over alleged " bully boy" tactics from unions.

The Hollywood studios backing Jackson have said they are scouting alternative locations because of the dispute, with Scotland, Ireland, Canada, Australia and eastern Europe all potentially in the frame.

But the union, NZ Actors Equity, has called for an international boycott of "The Hobbit" after accusing producers of refusing to recognize its right to negotiate minimum standards for its members.

The film adaptation of The Hobbit could become the most expensive movie of all time.

The Hollywood blockbuster -- a prequel to The Lord of the Rings trilogy and planned to be shot in New Zealand for the last decade - - is expected to cost 500 million U.S. dollars.

The four-hour epic would be shot in high-definition and 3D.