The 41-year-old actress has agreed to reprise her `Lord of the Rings` role of Galadriel - who doesn`t appear in the original J. R. R. Tolkien novel - in the prequel, much to the delight of director Peter Jackson.
Peter said: "Cate is one of my favourite actors to work with and I couldn`t be more thrilled to have her reprise the role she so beautifully brought to life in the earlier films."
The director also confirmed the casting of Swedish actor Mikael Persbrandt as shape-shifter Beorn.
He said: "The role of Beorn is an iconic one and Mikael was our first choice for the part. Since seeing him read for the role we can`t imagine anyone else playing this character."
Also among the latest actors to be cast in the movie are Ken Stott, Sylvester McCoy, Ryan Gage, Jed Brophy and William Kircher.
Ken will play Dwarf Lord Balin, former `Doctor Who` star Sylvester is wizard Radagast the Brown, Ryan will be Drogo Baggins and Jed and William will star as dwarves Nori and Bifur respectively.
They join the already cast Martin Freeman - as lead character Bilbo Baggins - Richard Armitage, Aidan Turner, James Nesbitt, Rob Kazinsky, Graham McTavish, John Callen, Stephen Hunter, Mark Hadlow, Peter Hambleton and Adam Brown.
Shooting is scheduled to begin in New Zealand next February.