Justin Timberlake and Jessica Biel Split
updated 03/11/2011 AT 11:00 AM EST
•originally published 03/10/2011 AT 08:35 PM EST
The two decided to end their relationship recently and "there are no hard feelings," a source tells PEOPLE exclusively. "It was completely mutual and they both decided it was time to move on."
The source adds that Biel is keeping her house in L.A. and she and Timberlake, who started dating in 2007, will remain friends.
Reps for the couple released a statement Thursday, confirming the split: "Addressing the media speculation regarding Jessica Biel and Justin Timberlake's relationship, we are confirming that they mutually have decided to part ways. The two remain friends and continue to hold the highest level of love and respect for each other."
Timberlake, 30, and Biel, 29, were spotted together looking cozy as recently as the Vanity Fair post-Oscars party on Feb. 27.
Weeks earlier, Timberlake was "pretty inseparable" from Mila Kunis at the PEOPLE/Entertainment Industry Foundation SAG Gala in Los Angeles, according to an observer. But a source at the time told PEOPLE the Friends with Benefits costars were, well, just "friends" – and that Timberlake and Biel were "happy in their relationship."