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He was first linked to the Lord Of The Rings prequel in January, but it was recently revealed that no deal had been reached.
Doubts were cast over the future of the film when the estate of author JRR Tolkien revealed that it was suing New Line Cinema over profits for Peter Jackson's movie trilogy. It was also announced that the studio will be absorbed into Warner Bros after a string of costly flops.
However, del Toro confirmed that he is still in line to helm The Hobbit, saying: "I am still in negotiations, but I would love to move to New Zealand and eat sheep for the rest of the decade.
"I would love to respect the canon. Also the book has big spiders, and I love big spiders!"
He added that he was busy immersing himself in Tolkien's other works for research, telling TheOneRing.net: "All I can say is that I am diligently going through all material related to Middle-earth but only as a way of bridging a gap in my reading. I still respond the strongest to The Hobbit."
Peter Jackson will act as executive producer on the project, which will be split into two films.
Shooting is scheduled to begin in 2009 with possible release dates for the two movies in 2010 and 2011.
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