An insider exclusively told Reveal magazine this week: "[Arg] has always struggled to let her go and the pair ended up hooking up for one night only."
But a source has now told The Sun it was only a fling and Lydia "deeply regrets" what happened.
"Lydia can't believe she fell for Arg's charms once again," claimed the newspaper's source. "She puts it down to having a weak moment and deeply regrets leading him on. Arg was beaming afterwards, telling close pals it was a sure sign he was back in Lydia's good books. But that's certainly not the case."
We'll get the full story when TOWIE returns to ITVBe on Sunday night at 10pm.
Lydia and Arg have been on and off for seven years but their relationship ended off screen five months ago, much to the surprise of viewers who had just watched them house hunting together in Essex.
They came face to face in Palma shortly afterwards, leading to that dramatic scene where Lydia told Arg: "You're not the kind of person I want to be in my life. I would like you to stay away from my friends and family... My life is my life now, and I'm getting on with it, we'll keep it that we're strangers. We will just walk past each other and that's how I would like it. I don't want to know you anymore."
Arg ended up in tears but Lydia defended her comments saying she felt she had to be "brutal" to get her point across and everything had been said from the heart."
Find out what really happened between the TOWIE cast in Marbs in the latest issue of Reveal - available to buy now.
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