In last night's episode (1 April), Lydia revealed she had called time on her romance with boyfriend Ben, who she had met while travelling in Thailand.
Lydia confided in her mum Debbie Douglas and friend Lewis Bloor that she was "confused" over her true feelings for Arg, and admitted that she enjoyed spending time with him.
Now speaking in an video on the official TOWIE website, Lydia said: "I think now that I'm single it's a lot easier for me to have a friendship with James because obviously I felt a bit guilty at times if I was hanging out with James too much. If you've got a boyfriend they don't want to know that you're seeing your ex so much."
Lydia said she now feels so much happier being single: "It's good that I can still be friends without feeling guilty and of course there's still going to be boundaries. I feel that I'm happy to be single now.
"I'm just enjoying myself, but I'm never one to be like, 'Oh, I want to stay single for this long'. If someone whisks me off my feet then they do, but I'm happy being single and just enjoying hanging out with James.
"You can never say never to anything but at the moment I've only just broke up with my boyfriend. But never say never, me and James get on really well, but who knows?"
Arg has also spoken out since last night's episode saying it "wasn't really too much of a shock to the system hearing Lydia say she's single". Arg revealed that Lydia's single status now makes things easier between them if anything happens "down the line".
For exclusive competitions and amazing prizes visit Reveal's Facebook page NOW!
10 reasons why we want to be in TOWIE!