Cameron Diaz has sparked rumours that she is engaged to Good Charlotte's Benji Madden, having been spotted showing off a shining new ring.

Diaz attended the Academy of Motion Picture Arts and Sciences' Hollywood Costume lunch with Gwyneth Paltrow, and an eyewitness told People.com she was "casually and constantly twirling her ponytail, showing off the ring and often playing with it".

Later in the day, the 42-year-old star was seen with her possible fiancé, having dinner in Beverly Hills with a group of friends. 

People.com quoted a source as saying: "They arrived together with Benji driving. Cameron showed off her new ring and was smiling. They enjoyed dinner for several hours."

The source added: "Benji has lived with Cameron for the past couple of months. They act like they can't get enough of each other and spend a lot of time together.

"During the days they often share a workout. At night, they often stay at home and cook. For a girl who was happy being single, Cameron seems to have fallen in love. She is really happy."