Ruth Hicks was photographed giggling with the boy band hunk as he whispered to her after bumping into him during a Marbella hen party.
However, it turned out to be a careless whisper after her fiance Joe Adkins told her to "pack her bags" when the pictures were published.
But the stunned 26 year old insists her encounter with Niall was an innocent one, explaining to The Sun: "We only spent about 15 minutes in each other's company and we didn't kiss. Niall seemed a sweet boy and I think he fancied his chances with me. He was very flirty. But I told him I was engaged and he moved on.
"He's not my type anyway - he's too young, too puny and too short. And I am very much in love with my fiance. Joe feels like I have humiliated him. But I love him more than anything and would do anything to get him back. It's all just a giant misunderstanding but he won't even see me so I can't explain."
Joe confirmed the split, telling the newspaper: "Seeing my fiancee with that boy was so hurtful."
A spokesperson for the band adds: "The boys are pictured chatting to fans wherever they go. These photos are often sadly misrepresented which can lead to problems for the people pictured."
While being pictured with Niall can be harmful to your relationships, the singer's dad, Bobby, insists the pop star isn't a womaniser, and is actually scared of the attention.
He told The Mirror: "There are hordes of young girls around him, and not much room to breathe anywhere. He says it can be frightening. Coming out of airports and girls crowding around their cars, he's started to get really claustrophobic."