Jude Law and Sienna Miller have ended their engagement, a source close to the actor confirms to PEOPLE, saying, "It's over. Jude is moving on."
British media reported this week that Miller had been seeing Law's friend, actor Daniel Craig, while Law was fighting to win her back. (In July, the actor admitted to having an affair with his children's nanny, Daisy Wright.)
But Craig and a spokesman for Miller deny the pair had a relationship, and a source close to Miller and Law tells PEOPLE that the rumors aren't true. "Her and Daniel Craig are very good friends and have been for a while ... It's all just too ridiculous for words."
Miller and Craig – who reportedly has been chosen to be the new James Bond – met two years ago, while making the movie Layer Cake. This was also around the time that Law and Miller became friends on the set of Alfie.
Last month, Miller and Craig were spotted having dinner together at London's Ivy before they each left the restaurant separately, Sky News reports. But they reunited at the nearby Elysium nightclub and danced all night – until Craig dropped Miller off at her mother's house at 7 a.m.
"I'm going straight to my mum's place," Miller told the gathered photogs. "There's nothing going on between me and Daniel. We were in a movie together two years ago."