This has long been rumored, but now it seems to be official. I'm glad to see Peter Jackson return to this sort of film, rather than another overdone effects film. From E!online:

Peter Jackson "Bones" Up
by Josh Grossberg
Jan 18, 2005, 2:15 PM PT

Peter Jackson has a few Bones to pick with moviegoers.

The Oscar-winning Lord of the Rings ringmaster and his screenwriting-producing partner Fran Walsh have optioned the rights to Alice Sebold's bestselling debut novel, The Lovely Bones, and plan to make it their next big-screen venture after finishing their remake of King Kong.

Jackson and Walsh will coproduce the film with Britain's FilmFour productions, a division of state-owned broadcaster Channel 4. They'll get cracking on the script in January with their longtime collaborator, Philippa Boyens, according to Daily Variety.

Published in 2002, Bones is told from the vantage of a dead 14-year-old girl, who reflects back on the events that led to her rape and murder and how her loved ones cope with the tragedy.

The project will be more akin to Jackson's 1994's small-scale indie film Heavenly Creatures than his F/X-filled Lord of the Rings trilogy or Kong remake.

"It's the best kind of fantasy in that it has a lot to say about the real world," Jackson told Variety. "You have to have an experience when you read the book that is unlike any other. I don't want the tone or mood to be different or lost in the film."

No word how much the 43-year-old New Zealander shelled out for the option. But once the screenplay is completed and a budget worked out, Jackson and Walsh will start shopping it to distributors--which will likely result in another big payday for the couple.

Not that the director, who got his start helming such splatterfests as the super-low-budget Bad Taste and Dead Alive (aka Braindead), and his partners don't deserve it. The third and final Rings installment, The Lord of the Rings: The Return of the King, swept all 11 Oscars it was nominated for last year, and the trilogy grossed nearly $3 billion in worldwide box office.

That mega-success prompted Universal to pay Jackson and Walsh a whopping $20 million plus a substantial chunk of the back-end gross to embark on a "re-imagining" of the 1933 classic King Kong--a project that Jackson has dreamed of making since he was 13. King Kong, Jackon says, was the movie that made him want to be a director.

Besides Bones, the Los Angeles Times reports that Jackson is developing a biopic on late pioneering New Zealand aviator Jean Batten, entitled Jean Batten: The Garbo of the Skies.

King Kong, starring Jack Black, Naomi Watts, and Adrien Brody, is due out in December, while The Lovely Bones will hit theaters sometime in 2007.

Such a hyped up book - I was really disapointed when I read it...its not at all clever or interesting.

I guess the only good bit is the end and what DOESNT happen (I wont spoil it for people)