Kate & Lance Dance and Kiss in Cannes

Kate & Lance Dance and Kiss in Cannes
Kate Hudson and Lance Armstrong
Francis Specker/Landov (2)

05/24/2008 AT 01:00 PM EDT

Kate Hudson and Lance Armstrong only had eyes for each other at Dolce & Gabbana's annual party in Cannes Friday.

The pair kissed and danced to old Madonna songs and other '80s favorites. "They were beaming at each other," a source tells PEOPLE. "So cute."

In a VIP room so packed that Petra Nemcova couldn't get in, Hudson and Armstrong chatted briefly with Cannes juror Natalie Portman, who was holding hands with her folk-rocker beau Devendra Banhart. (Unlike all the other female celebrity guests, Portman wore Chanel because she decided to come to the party at the last minute.)

Other guests at the packed party, held at Baoli restaurant and club, included Lindsay Lohan (who made a brief appearance in the briefest of green dresses), Rose McGowan (who partied until 5:30 am, broken foot and all), Kerry Washington, Naomi Campbell, Dita von Teese and Diddy.

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