The Sun reports that Adeleye was angered when his fellow finalist started spraying deodorant throughout the North London house they are currently living in. He accused the retired PE teacher of attempting to damage his vocal cords.
During the "nose to nose" row over breakfast, Wagner hit back calling the singer a "diva" and told him to "back off and act like a man".
"John insisted the fumes were ruining his vocals cords and was convinced Wagner was doing it deliberately," a source said. "He snapped and had it out with him. Everyone was really worried as they're quite big blokes to be facing off like that."
They continued: "It woke some people up and some of the younger people like Cher were quite scared. Security came in and calmed everything down, but there is some serious bad blood."
An insider from the ITV1 show added: "This year's house is bigger than ever but the fact is, lots of people who may have very little in common are in each other's pockets.
"The row between Wagner and John is typical. Wagner is a very big character who loves marching round showing off while John is way more quiet. Two more different people you couldn't hope to meet."
The row comes just days after wildcard Treyc Cohen revealed that her return had upset Cher Lloyd and Katie Waissel.
The X Factor continues on Saturday at 7.30pm on ITV1.