Spokespeople for both Miley and Liam confirmed the news to PEOPLE magazine that the couple have split after months of speculation.
Miley, 20, and 23-year-old Liam met on the set of The Last Song in 2010 and got engaged in May last year.
Earlier this year, the stars decided to postpone their nuptials. After deciding to delay the wedding, Miley was spotted alternately wearing and not wearing her 3.5-carat Neil Lane engagement ring.
They were last seen together in August for the LA premiere of actor Liam's latest film Paranoia.
The rumour mill went into overdrive over the weekend after Wrecking Ball singer Miley unfollowed her Hunger Games star fiancé on Twitter.
Australian actor Liam, who only joined Twitter in June, is still following his ex-fiancée on the microblogging website.
Three months ago, Miley was forced to deny rumours that she was involved with Canadian singer Justin Bieber and Liam has recently come under fire following reports that he has been seeing actress January Jones.
"I'm engaged! I'm engaged. That is impossible," said Miley in a morning interview on Washington DC radio programme The Kane Show.