The 23-year-old actress is said to have accepted his proposal over the festive season, reported MTV online.
"Jennifer is walking on air. She's madly in love with Nicholas and is the happiest she's ever been. Jen likes to live a relatively modest private life. She knows news of the engagement will make that harder if not impossible. And she is obsessed with her privacy," a source said.
The couple spent the festive season at her family home in Lexington, Kentucky, with the actor seeing it as the perfect opportunity to propose.
"He stook up and took her hand, helping her to stand up as well. When she was on her feet, he knelt down and pulled the ring out of his pocket and asked her to marry him.