From PEOPLE Magazine Click to enlarge
Back in March, Miley Cyrus had fans asking, "Is that what I think it is?" when she was spotted wearing a sparkling solitaire on her left-hand ring finger. The singer-actress quickly calmed the frenzy with a simple tweet. "I'm not engaged," she wrote, adding, "It's a topaz, people!"

Today, Cyrus is wearing a diamond. On May 31 her boyfriend of three years, The Hunger Games actor Liam Hemsworth, 22, popped the question in what a source describes as an "really romantic" proposal in Los Angeles. The ring: a 3.5-carat cushion-cut diamond set in an Art Nouveau-inspired gold band from jeweler Neil Lane. "I'm so happy to be engaged and look forward to a life of happiness with Liam," Cyrus, 19, tells PEOPLE. Adds the source: "She's so madly in love, it's not even funny."

The couple met in 2009, when they costarred in the romantic coming-of-age film The Last Song. Cyrus-who shared her first kiss with Hemsworth on-camera-never expected to fall for the 6'3" Aussie. "I'm not really a big luvvie person," she told PEOPLE in 2010. "I'm not, like, mushy. I was pretty much, like, 'I'm going to die alone!' Liam was the first person that made me want to be in a real relationship." Hemsworth was equally smitten. "She's got such a big heart and [is] just so open," he said.

On the surface the fashion-minded firecracker and her laid-back surfer "look so different," she's said, "but it's about the inside and how you feel and connect spiritually." The pair broke up briefly in 2010 but ever since have shown signs they're serious about each other: They've been living together in L.A.'s San Fernando Valley (where they love to ride bikes together) with their five dogs. "They are inseparable," says the source."They take care of their dogs, hang out at home. They laugh a lot-and that's great." Cyrus also has been by Hemsworth's side as his star has grown. "She's very supportive," he recently told PEOPLE.

Though she's still a teen, Cyrus's parents, Billy Ray, 50, and Tish, 45, are "thrilled" about the engagement and "have always thought of Liam as part of the family," says the source. "They couldn't be happier." Hemsworth's clan-which includes his older brothers, actors Chris and Luke-is "equally overjoyed," says the source. "They are all one happy family."

So when will they make it official? The pair are in no rush to set a wedding date, says the source. "It's all very new for them. They're just so in love and so happy that they can take things to the next level."

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  • Reported by J.D. Heyman/L.A.,
  • Elizabeth Leonard/L.A..