Update: Not so fast, says Entertainment Weekly. According to their sources, MGM is still trying to snag Freeman to play Bilbo in The Hobbit and has come back to him with a new schedule that would let him shoot both. Stay tuned...

We’ve known for a while that casting has quietly gotten under way on The Hobbit, despite the fact that the film still doesn’t have an official greenlight and remains largely caught in the web of MGM’s financial issues. But Peter Jackson, who has yet to confirm he’ll actually direct the thing, has been looking for actors and now comes a story that Martin Freeman, long rumoured as a possible Bilbo Baggins, has had to pass on a “firm” offer to play the role.

The reason, according to The Sun? The offer came in too late for him to squeeze any part into his schedule considering that he’s committed to the next series of the Beeb’s Sherlock. The story, as picked up by The One Ring, was that, “It was one of the most difficult decisions of his career. MGM, who are making the film, only got a formal offer over in the last couple of weeks.  It was agonising but he had no other choice.”

Since this news comes from “a source” who “told” The "Sun" about it, and since last we heard the film's legal issues still hadn't been sorted, we’re going to treat it as more rumour than anything for now, and since it’s about an unannounced casting situation, we doubt there’s any likelihood that it’ll get confirmed unless either Jackson or Freeman himself goes on the record.

Plus, with no actual date set, there has been little indication as to when The Hobbit will be filming. Presumably, Jackson and co are still angling for a late 2012 release which is why the clash happened in the first place.

So if not Freeman, then who? Pick your Baggins in the comments...