The painter/decorator is even reported to have been spotted kissing Grace Woodward, 33, backstage.
'Matt is smitten,' says a source. 'He tried to hide his feelings for a long time but he just feels so strongly about Grace.
'They have become very close and he finds it easy to relax around her. They constantly have their arms around each other.
'It's not like they can go out for dates but they have been caught cuddling and have shared a kiss or three. They are both single so they don't see any harm in this.'
But an X Factor spokesman has rubbished the claims.
'He is fond of Grace but I think they are just very good friends,' he tells the Daily Mirror.
Matt, 27, split from ex-girlfriend Lauren Cutmore, 24, just before The X Factor 2010 started.
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