The remains of a little cousin of modern man nicknamed "the hobbit" that lived only 12,000 years ago have been unearthed by scientists, in a spectacular find that rewrites the story of human evolution.

The discovery on a remote Indonesian island shows that Homo sapiens shared the Earth with more primitive relatives soon before the dawn of recorded history, and suggests a tantalising explanation for the myths of elves, dwarves and "wild men of the woods" that are popular all over the world.

Some scientists even believe it possible that the creature, or something like it, could still survive today in the planet's most isolated and unexplored outposts.

Homo floresiensis, which takes its name from the island of Flores where it was found, stood just 3ft 3in (1m) tall and had a brain a quarter of the size of modern man's.

Also known affectionately as "Flo", it hunted pygmy elephants the size of ponies and giant rats as large as golden retrievers, while trying to avoid huge Komodo dragons and other predatory lizards that are now extinct.

The first specimen found by the Australian research team at the Liang Bua cave is an adult female from 18,000 years ago, and parts of a further six skeletons have since been discovered, ranging in date from 95,000 years ago to just 12,000 years ago.

As modern humans were present in the region at least 45,000 years ago, and are known to have reached Flores, it is certain that the two species encountered one another. Scientists think this may be reflected in the local legend of a race of "little people" called the Ebu Gogo.

"There are persistent legends of little people living on the islands of Indonesia," said Henry Gee, a senior editor of the journal Nature, which will publishes details of the discovery tomorrow.

"On Flores, the legends speak in great detail of a creature named Ebu Gogo that stood about a metre tall and interacted with the islanders. The last tale dates from only about 100 years ago.

"These are folk tales: until this find they could be dismissed as tales of hobbits and leprechauns, but no longer. These stories don't feel like mythology, they feel like history and recollection. Of course it could explain all kinds of legends of the little people."

It is impossible to be sure that such "hobbits" have totally died out, or did not survive until very recently, Dr Gee said.

"They are almost certainly extinct, but it is possible that there are creatures like this around today. Large mammals are still being found. I don't think the likelihood of finding a new species of human alive is any less than finding a new species of antelope, and that has happened."

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