updated 03/08/2013 AT 3:00 PM ET
•originally published 03/08/2013 AT 5:00 PM ET
“Miley is still upset with Liam,” a source told PEOPLE on Friday after the 20-year-old star stepped out sans engagement ring. “She took the ring off to make him mad.”
But, says the source, “It doesn’t mean that they have split. Miley says they are still together.”
Given the recent ups and downs, “Liam did fly home [to Australia on March 1] so they could have a break,” the source adds, noting that he has been spending time with his brother Chris, with whom he is very close.
And while he is about 14,500 miles away, Cyrus is hanging in L.A. and was photographed out Thursday night with longtime pal, Paul Khoury.
But an insider counters that the two have been longtime friends: “[They] used to go clubbing together in L.A. They have been friends for a while,” says insider.