Keep your eyes peeled for short folk and dragons – filming for The Hobbit has begun in Wellington and secret locations around New Zealand.

Actors playing the diminutive hobbits, lanky elves, dwarfs and wizards, including Sir Ian "Gandalf" McKellen, have been spotted around Wellington for months since casting announcements began trickling out.

McKellen blogged last week about his first rehearsals with director Sir Peter Jackson.

Now, on the first day of filming, Jackson has revealed a sneak peek inside the new Bag End, the home of lead hobbit Bilbo Baggins.

The photo of Jackson stepping through the front door of Baggins' fictional home in The Shire was the only photograph issued by Warner Brothers yesterday, part of strict secrecy surrounding the film. A spokesman for Jackson has said his health was "good" after a scare earlier this year resulted in surgery for a perforated stomach ulcer.

Warner Bros would not reveal the location of Bag End, but it is understood it is not part of the original "Hobbiton" near Matamata, created for The Lord of the Rings movies.

Hobbiton boosted tourist numbers in Matamata by tens of thousands when the trilogy was shot there almost a decade ago, and fans still flock there.

Crew members lips' are sealed as to which scenes will be shot first, and which cast members will be involved.

A spokeswoman for the production unit said only that everyone was "very excited" to get started on filming.

There have been several casting announcements since Martin Freeman was confirmed as the lead in October last year.

Yesterday Warner Bros named Kiwi actors Jeffrey Thomas and Mike Mizrahi for the roles of dwarf kings Thror and Thrain.

Andy Serkis, Cate Blanchett and Orlando Bloom have all been confirmed to reprise their Lord of the Rings roles as Gollum, Galadriel and Legolas.

Elijah Wood, who played Frodo Baggins in The Lord of the Rings, has been confirmed to play a part in The Hobbit, despite his character not appearing in JRR Tolkien's book, which is set 60 years before the Rings trilogy.

The Hobbit tells the tale of Bilbo's quest to snatch the treasure guarded by Smaug the dragon and reclaim the dwarven kingdom of Erebor.

The screenplays for the two films have been written by Jackson, partner Fran Walsh, Philippa Boyens and Guillermo del Toro, who pulled out of directing the movies last year.

Titles for the two films are expected to be An Unexpected Journey and There and Back Again.