The One Direction star was spotted with the American songstress taking a stroll together in New York's Central Park with 1D's stylist Lou Teasdale, her fiance Tom and their baby Lux.
The pair were first linked after 'X Factor USA' host Mario Lopez revealed he'd spotted them holding hands backstage last month.
He told listeners of his US radio show: "Taylor Swift was the special guest performer, and [here's] a little inside scoop for you. During rehearsals, Harry from One Direction came and slapped me on the back, and said, "Hey, Mario, how ya doing?" And I said, "What are you doing here?" And he sort of [pointed] toward Taylor."
"So Taylor Swift and Harry from One Direction - you heard it here first. [They're] officially hanging out, I can say that much."
But some reports claim that Taylor is using Harry to make her ex, Conor Kennedy, jealous.
"And the way she thinks she is making him jealous is to show him that she has options, but in reality, she actually wants Conor and is just doing this to "Wear the pants in the situation." She has no interest in making the Harry thing work."
href="http://www.huffingtonpost.co.uk/2012/11/06/huffpost-celeb-awards-201_n_2082275.html" target="_hplink">VOTE IN THE 2012 HUFFPOST CELEB AWARDS