Liam went to confront Ferne about an incident from the previous few days, where he had brought another girl to the pie and mash night and Ferne had jokingly said it was "disrespectful".
Their fallout follows on from the previous week, when Ferne said she didn't see any romance between the pair after he tried to woo her on three dates, and he called her a "psycho" in a conversation with Lydia Bright.
In last night's episode, while approaching Ferne and Billie Faiers at the Mexican Day of the Dead party, Liam told Ferne he didn't bring a girl to make her jealous or upset, but Ferne questioned why his motives were "premeditated".
"I wasn't bothered that you brought another girl to the pie and mash night," Ferne hit back. "It was banter, we were all bantering."
Liam said: "How is that funny after everything that's happened between me and you? I actually like you, so the fact that you're bantering me about another girl is not funny to me. I just felt that you tried to belittle me. I've done nothing but be polite and courteous.
"Everyone was laughing and I've done nothing wrong to you Ferne. The fact I brought another girl shouldn't make any difference. Don't ever think you can laugh at me, don't ever take my kindness for weakness."
Ferne acknowledged that Liam had treated her well on dates, and reiterated that she had wanted them to remain friends, but said: "From that, you said to Lydia she's a 'f**king psycho' so how you can stand here and say this. I think you're a little bit bitter."
Liam said Ferne had "done him a favour", saying he felt like he had "dodged a bullet".
Ferne demanded that Liam leave, and called the argument "ridiculous", saying she has never even argued with an ex boyfriend like this.
Liam hit back: "Jealousy is an ugly trait and right now, it's more attractive than you."
TOWIE airs every Sunday and Wednesday at 10pm on ITVBe.
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