The movie was due to be directed by first-time feature film-maker Neill Blomkamp.

Jackson, who won a best director Oscar for Lord Of The Rings, was an executive producer on the movie, which was scheduled for release in the summer 2008.

Rising costs

Universal Studios and 20th Century Fox dropped out as financial backers in October.

Rumours suggested the studios were concerned the budget could reach £200m, after an original projection of £135m.

The film-makers said the studios pulled out after they and Microsoft refused to reduce their deals on the project.

Halo is widely credited with making Microsoft's Xbox games console a success in the West.

The video game has a complex mix of mythology, characters and worlds and follows the adventures of futuristic super-soldier Master Chief as he fights to save mankind from an alien race.

The original game was launched in 2001, and went on to sell five million copies around the world.

More than seven million gamers bought the 2004 sequel, and the series' third instalment is due out next year.