According to The Sun, the Coronation Street actress, 38, feels like she can't go through with a marriage she is uncertain about – especially when there's children involved.
A source told them: "Kym is heartbroken. She carried on wearing her ring after she and Dan decided to take a break and hope they'd get back together.
"But it has become clear there is no way back for them. There are a lot of feelings still there, but the engagement was too much, too soon, and seems to have driven a wedge between them."
The insider added: "Neither was prepared to go through with the marriage when it wasn't right. It wouldn't have been fair on them, or the kids involved."
Personal trainer Dan, 32, has daughter Lexi-Grace, four, from a previous relationship with Hollyoaks star Stephanie Waring.
Last month it was alleged that Kym grew tired of 36-year-old Stephanie's 'meddling' in her relationship with Dan.
But Stephanie was quick to dismiss these rumours. Speaking at the British Soap Awards, she said: "I just speak to Dan about Lexi and that's it. I've no idea how I've got involved in this."
Last week Kym told OK! Magazine: "Nothing has really changed much with the situation between Dan and me."