11/15/2010 AT 4:20 PM ET
Britney Spears’s parents, Lynne and Jamie Spears, are reconciling eight years after their divorce.
“They are back together and are doing well and happy,” a source tells PEOPLE. “[They’re] not remarried but back together.”
The couple, who divorced in 2002, were looking friendly on Saturday at Los Angeles lounge Boudoir. Onlookers at the lounge spotted Lynne and Jamie cheering and dancing as DJ Mr. Best spun Britney’s hits, like “Toxic” and “Gimme More.”
“They were in a great mood together,” says an onlooker. “They were laughing together – dancing and laughing [and] totally having fun.”