On Saturday, Cyrus and Hemsworth were spotted hanging out backstage at the Falls Music Festival in Byron Bay.
"They were in a large group with Chris Hemsworth and other family," says onlooker Ashleigh Saunders. "They were chatting and laughing. At one point, Liam was rubbing Miley's back. They looked very happy and affectionate."
Adds another source: "He was really protective of her. He would just pull her close to him and put his arm around her."
Before the festival, Cyrus also stopped by fashion store Spell to pick out a few items.
"Elsa [Pataky] organized a private session after hours for Miley and a few friends to come and shop," says Mel Carrero, a publicist for Spell. "She saw a few of Elsa's pieces and so she wanted to check it out. She was pretty down-to-earth, funny. It was fun."
After splitting two years ago, "Miley never got over Liam," a source close to the singer tells PEOPLE. "Despite them constantly fighting before the split, Miley always said Liam is the love of her life."