With 'Shrek 2' having earned $260.3m at the American box office in 13 days, it is hoped that 'Shrek 3' will reach US screens in time for Christmas 2006.
Variety reports that studio DreamWorks has hired Peter Seaman and Jeffrey Price to write the script, the duo also penned 'How the Grinch Stole Christmas'.
Other writers could join the project in the coming months and it is expected that stars Mike Myers, Cameron Diaz and Eddie Murphy will return to voice the lead characters.
'Shrek 2' opens in Irish cinemas on 2 July.
