BERLIN (Reuters) - Richard Wagner's grandson has agreed to resign as head of Germany's Wagner festival in August after a 57-year reign, a spokesman said on Tuesday, announcing a decision which could help end an epic family battle.

In what media have called the "war of the cousins", three great-grand-daughters of Richard Wagner have fought for years for the right to succeed 88-year old Wolfgang Wagner, who had so far refused to step down from the festival he led since 1951.

"Wolfgang Wagner decided...it is now time to hand over responsibility," a spokesman for the opera festival in the southern German town of Bayreuth said.

Wagner had written a letter to the Richard Wagner Foundation, which has the final say on the festival's leadership, saying he would step down by the end of August.

Wolfgang Wagner surprised opera fans a few weeks ago when he first indicated he could resign and made clear he wanted his daughter from a first marriage, Eva Wagner-Pasquier, 63, and her much younger half-sister Katharina, 29, to take over together.

Media said the two women rivals had not talked to each other in years, but Katharina said earlier this month they had grown closer since last year's death of Wolfgang's second wife Gudrun, Katharina's mother.

"There is some sisterly affinity," Katharina said.

The festival spokesman said Foundation members were optimistic they would find a leadership solution in the coming months. Asked whether the half-sisters would take over jointly, he said: "It's within the realm of the possible."

In 2001, the foundation chose Eva, a theatre manager, as Wolfgang's successor, but he refused to step down, insisting his contract was for life.

Katharina Wagner, a statuesque blonde, had her directing debut at the Wagner festival last year and received mixed reviews for "Die Meistersinger von Nuernberg". Some critics say she is too young and inexperienced to lead the festival.

Richard Wagner himself inaugurated the purpose-built opera house at Bayreuth in southeast Germany in 1876 after searching in vain for a venue big enough to stage epic operas such as his four-part Ring cycle.

Demand for the annual festival is so high that fans can wait up to 10 years for a ticket.

Whether family tensions will wane under an Eva-Katharina duo remains to be seen, as the half-sisters' cousin Nike, 62, has also made clear she aspires to run the festival.

Nike runs an arts festival in the city of Weimar and is the daughter of Wolfgang's brother Wieland.