"Lucy is having a break from filming after a whirlwind series," said a source.
"Emotionally she's torn between her feelings for Mario and a surprise new romance with Tom. She needs some time and a bit of space to clear her head."
Rumours first emerged that the 22-year-old was calling time on her television career after she was left frustrated with the way she was portrayed on the show.
Lucy was caught in a love triangle between her former fiancé Mario Falcone, who she broke up with after he allegedly cheated on her several times, and her new beau and co-star Tom Pearce.
The brunette beauty reportedly felt that her storyline was making her look "stupid" and had decided to take a break from the on-screen drama.
In the finale of series ten, Lucy and Mario are filmed deep in conversation, with the former lovebirds revealing their feelings for each other and Mario asking Lucy to take him back.
Lucy and Mario Falcone
"All the stuff that has happened in the last month, all the changes I've made are for you," said Mario.
"Even though Pascal is amazing, I think about you in the back of my mind," he added, referring to his then-girlfriend Pascal Craymer. "It's not fair on her, it's not fair on Tom."
"How could I ever trust you, or what you are saying?" said Lucy.
"That's something we should work on together," replied Mario. "It's up to you. Think about it."
The news of Lucy's departure, which is said to be announced on the show's Christmas special on 11 December, comes after TOWIE favourite Joey Essex announced he was quitting the show last month.
The blue-eyed star is currently in the Australian jungle, filming as a contestant on I'm A Celebrity... Get Me Out Of Here! and has been tipped as the favourite to win the show.