The previously announced film has been put on the back burner while the director completes his Avatar trilogy.
"I see the good the Avatar franchise can do in terms of keeping a world audience cognisant of our relationship with nature, but doing it in an entertainment context," Cameron told MTV News.
"Ultimately I think there's more good to be done there than with Battle Angel. Battle Angel is just a great, kick-ass story."
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Cameron admitted that there was a point at which it was a toss-up between working on Avatar and Battle Angel, but that he had no regrets about the choice he made.
He promised that the latter project would not be passed into the hands of another director.
"It would have to be pried out of my cold dead fingers," Cameron said. "But on the other hand, I don't want to take it to my grave either. [We want to see it] at some point, yeah."
Battle Angel is based on the manga of the same name, which follows the adventures of amnesiac cyborg-turned-bounty hunter Alita as she attempts to learn the secrets of her past.
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