Superman has been iconic since the birth of the comic strip

Warner Bros are said to have parted amicably with McG after a dispute over the reported $200m (�107m) budget, the Hollywood Reporter said.

The trade newspaper said the director wanted to shoot in New York while the studio favoured Australia.

The project has been bedevilled by a series of personnel changes.

McG, realname Joseph McGinty Nicol, is also said to have argued over casting with the studio.

The Hollywood Reporter quoted him as saying: "When I flew to New York to scout, I became enamoured with our greatest American city.

"It was clear to me that this was Metropolis. As a film-maker, I felt it was inappropriate to try to capture the heart of America on another continent.

"I look at Superman as a character that embodies all that is beautiful about America."

The studio must now begin the search for a new director, with its choice of script not yet set in stone.

Various earlier efforts at filming the latest Superman have had Tim Burton and Rush Hour director Brett Ratner down to take charge.

Nicolas Cage, Jude Law and Josh Hartnett have been among those rumoured to be ready to don the comicbook hero's red cape.