The source continued: “[Miley] was all touchy-feely with Kaitlynn the whole night and kept making out.
“During the night, they stood up and started dancing with their friends in the section they were in and kept making out against the wall.”
The loved-up pair were later papped on the streets of New York holding hands.
The photos will undoubtedly hit Liam Hemsworth hard as both Miley, 26, and Liam, 29, have been embroiled in a very public battle since the actor filed for a divorce.
After Miley took to Twitter to rant about the speculation about the end of their seven-month marriage, sources tell Life & Style that Liam is terrified she might spill some more tea.
"Liam’s petrified of what else she’s going to reveal – the sex, the fights, the drugs and much more,’ the source spills of the perceived threat of more drama.
"It’s like his biggest nightmare is becoming reality!’ adds the source - who explains that the actor is ‘an extremely private person.’
They also say that Liam would be mortified "if Miley revealed all the juicy details about their sex life".