It was earlier reported that the veteran actress has asked showrunner Julian Fellowes to write her fan favourite character out of the third series to free up time for her movie and stage pursuits.
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The LA Times now reports that a representative from Carnival Films, which produces the Julian Fellowes-created programme, is now denying the actress's departure.
The spokesperson says: "Series three is currently filming with Maggie along with the other cast. We do not comment on future storylines. However, there is no truth in the story that Maggie is leaving the show."
It was earlier revealed by producer Kate Beaton that the third series of Downton Abbey will have a major character death, which some speculated to be Smith's character.
The third series will see Shirley MacLaine joining the cast. The actress has signed on to play the mother of Lady Grantham.
Downton Abbey will return to screens later this year on ITV1 in the UK and on PBS in the US.
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Watch Dame Maggie Smith in Downton Abbey below: