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According to The Hollywood Reporter, the Gossip Girl star impressed the studio with her audition and work in adult-themed drama The Town - despite bosses initially looking for an older actress.
It is believed Lively's character will be faithful to her comics counterpart. In the Green Lantern DC Comics series, Carol Ferris runs her father's aerospace company and hires cocky test pilot Hal Jordan (Ryan Reynolds), who later becomes an intergalactic superhero.
Lively is thought to have fought off stiff competition from Keri Russell and Jennifer Garner for the role.
Green Lantern, directed by Martin Campbell, is expected to arrive in cinemas in June, 2011.
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