Adding, "Britney was in the studio in Beverly Hills last week with Elton for the super-secret recording session overseen by uber-producer Andrew Watt."
The source also claimed the single "is going to be the song of the summer," and those who have already heard it said "it is so good".
"Britney is officially back. She's back to work, and she's super excited," they said.
The news comes after Spears posted a video of herself to Instagram where she was heard singing her iconic single Baby One More Time.
Captioning the post "I haven't shared my voice in an extremely long time … maybe too long," the singer had fans speculating new music could be on the way following the termination of her almost 14-year-long conservatorship in November last year.
Meanwhile, the Rocket Man hitmaker is no stranger to rerecording his past hits.
Late last year, the star collaborated with British pop star Dua Lipa to record the hit Cold Heart, which was a mashup of two of his songs, Rocket Man and Sacrifice.
The song quickly became a fan favourite, reaching the number one spot on the New Zealand music charts, and has been performed by both artists at their respective concerts this year.