* Lachlan Murdoch returns to exec role after 7-year hiatus
* Younger brother James given more senior role
(Adds background, details, reaction)
LONDON, March 26 (Reuters) - Rupert Murdoch has brought eldest son Lachlan back into the leadership of his media empire and promoted younger son James, setting them up to succeed him when the 83-year-old tycoon finally steps down.
Lachlan, 42, will become non-executive co-chairman of both entertainment group 21st Century Fox and publishing company News Corp - sharing both roles with his father.
James, 41, will become Fox's co-chief operating officer alongside long-time Murdoch stalwart Chase Carey, the latest step in his come back after he was forced to relinquish some roles during a phone hacking scandal in Britain.
Both sons have at various times been tipped as the heir apparent to their father, and it remains to be seen whether they will be able to work together when Rupert finally hands over.
"It's very significant," media commentator and former Murdoch editor Roy Greenslade told Reuters.
"I think it underlines the fact that it remains a family dynasty in spite of being a listed company. The two boys are being prepared to inherit."
The announcement of Lachlan's return is a boost to Rupert, who has always said he would like his children to be involved in the running of his empire that consists of movie studios, television networks and newspapers around the world. Rupert split News Corp into the two separate businesses in 2013.
"Lachlan is a strategic and talented executive with a rich knowledge of our businesses," Rupert said in a statement.
"James has done an outstanding job driving our global television businesses," he added.
"Our collective future has never been brighter."
Daughter Elisabeth, who like Lachlan and James is a child of Rupert's second marriage to Anna Murdoch Mann, founded and sold her television business Shine Group to News Corp in 2011.
Lachlan had been tipped to succeed his father at the helm of his businesses, but in 2005 suddenly stepped down from his role as deputy chief operating officer of News Corp after clashing with his father's executives in New York.
Fox said on Wednesday Lachlan would split his time between his home in Sydney and New Corp's offices in New York and work with senior management to develop the businesses - roles more commonly associated with an executive position than a non-executive position.
During his time away from the head office, Lachlan had remained as a director at News Corp and Fox. He had also focused on interests in Australia through his private investment company Illyria Pty Ltd, which owns various media assets.
In his new role, James will have direct responsibility for Fox Networks Group, the firm's broadcast and cable channels business in the United States, as well as strategic oversight of Fox's businesses in Europe, Asia and the Middle East.
James had replaced Lachlan as the favourite to one day take over from his father when he became deputy chief operating officer of the old News Corp in 2011.
But his reputation was damaged by the fall out from a scandal at Britain's News of the World Sunday tabloid, where some staff hacked into voicemail messages to generate stories.
James, who had also been the head of the British newspaper arm, eventually stepped down as chairman of British pay-TV group BSkyB, where he built his career, saying he did not want to act as a lightning rod for the wider hacking scandal.
Prior to Wednesday's promotion, James had been Fox`s deputy chief operating officer, as well as chairman and CEO of its international arm.
(Additional reporting by Paul Sandle in London, Arnab Sen in Bangalore and Lincoln Feast in Sydney; Editing by Joyjeet Das, Christopher Cushing and Mark Potter)