Toy Story 3 will be released in cinemas in 2008

Disney chairman Dick Cook said the CGI animation unit would work on sequels to films made under the successful partnership with Pixar.

Pixar cut off talks to renew its distribution contract with Disney in January last year.

Cook said Toy Story 3 would be released in 2008, but would not be the main Disney animated feature for that year.

Traditional animation

The sequel will be made at the new unit to be built in Glendale, California, near the feature animation division's headquarters in Burbank.

"They'll have individual projects in there, using the same technology and the same infrastructure that we have at the main location in feature animation, and it will primarily be doing sequels to Disney/Pixar films," said Cook.

Disney has the right to make sequels to films from their Pixar relationship, with which Pixar can choose to cooperate or not.

However, Pixar has yet to show interest in the plans.

Cook also said that feature animation planned to produce one major film each year, for release in the summer or winter school holidays.

Disney's feature animation department - best known for its hand-drawn style films such as Cinderella, and more recently The Lion King - has been under fire in recent years.

Disney cut jobs and restructured studios, appearing to turn away from traditional methods in favour of computer animation.