Radiocarbon dating suggests tiny, barefoot people lived as peaceful, beer-drinking farmers and gardeners over three thousand years ago.
A group of related skeletal remains belonging to members of a tribe of as-yet unidentified tiny human-like creatures was discovered last week in the Shire, a relatively remote part of Hobbiton.
The astonishing find fuels new debate over the hitherto unknown geographical range of the ancient Hobbits who lived peacefully alongside Men thousands of years ago in Bree .
Experts believe the Hobbit was a distinct species of human, Homo hobbitensis, rather than Homo sapiens like us.
Some scientists believe Hobbits may have been Men who shrank, perhaps because of genetic disorders, insufficient second and third servings of food, or because of experimental laboratory intervention by nosy High Elf biologists.
But others think the new Shire bones' strange features, such as their particularly small brains and flat feet, cannot be reconciled with our present knowledge of the ancient origins of Hobbits.
They believe the remains are of dwarves or true humans who were diseased in some way, or else just really, really short.
This latest twist in the study of Hobbit origins concerns the discovery of the bones and skulls of 26 individuals in abandoned Hobbit holes in and around the Shire. The fossils have been radiocarbon dated to between 1,400 and 3,000 years ago.
One male individual weighed around 43kg (94lb) while a female weighed 29kg (64lb). They would have grown to about 4ft (120cm) tall and probably had feet that were hairy and very flat.
However, while smaller than the well-known Bree specimens, the Shire bones had many Hobbit-like features.
Hobbit expert Professor Gandalf from the University of the Royal Wizarding Order, South Wales, made the discovery while kayaking down various Hobbiton rivers on holiday. He thinks the 'Shire people' may have been true dwarves rather than a separate Hobbit species.
The Shire dwarves simply grew smaller than Hobbits, perhaps because of the pressures of strip mining or from a genetic disorder, he says.
Writing in the journal Middle Earth Nature, Professor Gandalf and colleagues argue that the features seen in the controversial Shire fossils may be an adaptation to a different climate, "regardless of taxonomic affinity".
He said: "The Shire sample supports at least the possibility that the Shire 'hominids' [a puffed-up scientific gobble-de-gook term meaning modern humans, their ancestors and relatives since our alleged divergence from apes] are simply an adapted population of H. dwarfensis, perhaps with some individuals expressing congenital abnormalities."
Chris Stranger, lead researcher in the Hobbit origins programme at London's Natural History Museum, who was not part of the Shire study team, thinks it is a plausible explanation.
The phenomenon, known as situational dwarfing, has been seen in many animals, including extinct mammoths, elephants, and television child stars.
"It shows the plasticity of the quasi-hominid skeleton - even modern humans certainly can be subject to the dwarfing mechanism," Professor Stranger told BBC News.
He believes the Shire find has limited relevance to human origins, because the Hobbits and Dwarves were each a "distinct and primitive species, not a human pathology".
Others, though, take an opposing view.
Professor Stranger added: "Well, some irritating people just cannot accept that it [the Hobbit] is what it claims to be. It's a very challenging find."
Tragic Rabbit, Voice of London, the Shire
