Apparent tensions between the pop stars reportedly reached an all-time high in July when Madonna highlighted similarities between her hit 'Express Yourself' and GaGa's 'Born This Way' on her 'MDNA Tour'.
Madonna later told Brazilian television that she had obviously "helped GaGa write" the chart-topping hit.
A new Star tabloid report has claimed that Paltrow is now caught in the middle of a battle between Madonna and GaGa over competing fundraisers for Barack Obama.
Paltrow is worried about making a choice as to which fundraiser she will attend as she does not want to offend either Madonna or GaGa, according to a source.
"Madonna is an intense friend and is controlling of everyone in her life. Gwyneth is sick of it, but she's also scared to ditch her," an apparent insider told the magazine.
Paltrow's representative has now denied that there is any truth to the story in a statement to Gossip Cop.
A friend of the Iron Man 3 actress also described rumours of a rift with Madonna as "crap".
Paltrow and Madonna struck up their friendship back in 1999.