It was reported earlier this month that Keisha Buchanan, Mutya Buena and Siobhan Donaghy were working on new material together, but Buena subsequently denied the claims.
However, it has since been alleged that the band recorded a track called 'Love Like This', written by Emeli Sandé and produced by Naughty Boy, at an Ealing recording studio last week and are putting together a comeback album.
The song is said to be reminiscent of the Sugababes' early work and includes the lyrics: "Won't hold my breath again, I still remember when I gave you my heart and it turned out irrelevant. Back on the medicine, back in the thick of it, it's here in the room but we don't talk about the elephant."
"The song is about not being used to being loved because you have been hurt so many times before, and that you think you have been loved before but in reality you haven't," a source told the Sunday Mirror.
"The girls are very much back to their soulful roots but this time around it's far more innovative. They've recorded more tracks too - and they're working hard to get a body of new work.
"Siobhan has left her job in the City and they are concentrating on getting material together for an album. They are very dedicated and it's working well."
Three major labels are apparently interested in signing the reformed group and new manager Felix Howard, co-writer of debut single 'Overload', will help secure them a record deal once they have enough material.
Buchanan wants to release her solo work before the group unveil their new album, the report adds.
Buchanan's spokesperson recently told Digital Spy: "Keisha has been working on a number of exciting projects both old and new.
"She is in the final stages of completing her much-awaited solo album and believes her fans will be equally excited with what's to come."
Watch the original Sugababes perform their debut hit 'Overload' live below: