The 'Hunger Games: Catching Fire' actor was seen kissing the Mexican actress in September - just a day after confirming the end of his engagement to Miley Cyrus - but the romance is said to have broken down after he realised Eiza was using it as a publicity stunt.
A source told HollywoodLife.com: ''Liam told Miley he's not seeing Eiza anymore. He found out that she was tipping off photographers; she was totally using him! Miley is thrilled obviously -- it's street justice, especially after Eiza was so cocky about things.''
Miley - who has been romantically linked to music producer Mike WiLL Made It and Rolling Stone magazine heir Theo Wenner since splitting from Liam - is said to be pleased that the Hollywood hunk was used because he moved on from their long-term relationship quickly.
The source added: ''[Miley has] forgiven Liam. But his hook-ups with Eiza and the way he was so open about it really hurt her, so in a way she's kind of glad he got used. Maybe it was a lesson he needed to learn. They just started talking again so it's not like they're back together, but they're in a way better place, I could see them giving things another shot.''
Miley and Liam - who began dating in 2009 and later got engaged in June 2012 - are on good terms with one another and are said to have plans to see each other ''around Thanksgiving'' which will be celebrated on November 28.
The source explained: ''Liam and Miley are back in touch. They've forgiven each other, and are even talking about meeting up, probably around Thanksgiving.''