Former Spice Girl Mel, 39, and X Factor winner Matt, 30, are said to have grown close while promoting their joint single, 'Loving You'.
Rumours have flown about their relationship for months, as the pair have been seen holding hands and even shared a kiss during a gig at London's G-A-Y.
But now, according to the Sunday Sun, the pair are seeing each other.
A source told the newspaper: "They started seeing each other a few months ago. It was short-lived initially because the passion started to fizzle out.
"But they've been working together lately and the attraction and chemistry between them is clear."
The pair first set tongues wagging when they released the video for 'Loving You', where they are seen kissing passionately in bed.
In the past, when asked about the nature of their relationship, both Matt and Mel have denied any romance, insisting they are just good friends.
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Watch Mel and Matt's steamy video for 'Loving You':