The Beady Eye frontman has been accused of fathering a seven-month-old girl following a fling with journalist Liza Ghorbani - who met the former Oasis singer when she interviewed him for the New York Times in 2010 - but he shrugged off the allegations by sipping cocktails on the Balearic Island.
He was spotted swigging rum, tequila and mojitos as he hung around the exclusive Pikes hotel in San Antonio, where he wore a T-shirt with the words, "Baby F**k Off" - lyrics from a 1977 punk song by Wayne County & the Electric Chairs - in an apparent dig at the claims.
Following the allegations, it was said Liam would sue the New York newspaper which accused him of being at the centre of the paternity case, listed as 'Anonymous vs Anonymous', but he has denied taking legal action.
Speaking yesterday from Ibiza - where he played at the Ibiza Rocks event with Beady Eye - he is quoted by The Sun newspaper as saying: "I'm not suing anyone. I'm working here."
When asked again about the speculation he fathered the love child, Liam - who has recently clashed with singer Robbie Williams - joked: "What - you mean about me and Robbie Williams?"
Liam's wife Nicole Appleton - whom he has a son, 12-year-old Gene, with - is reportedly livid following the allegations he has fathered Liza's child and has told Liam not to return to England for "a few weeks."
A friend told the Daily Mail newspaper: "Nicole has told Liam not to come home, at least not for a few weeks, and is furious."
The New York Post newspaper alleged yesterday Liam - who also has two other children, Lennon, 13, with ex-wife Patsy Kensit, and Molly, 15, with Lisa Moorish - has previously admitted the baby is his in an email.
A source told the publication: "Liam admitted the child is his in an e-mail, saying she is a beautiful child because she has 'rock-star genes'.
"Liza met Liam when she interviewed him for The [New York] Times, and they began an affair. It continued until around three months after the birth of the child. He ended the relationship when she told him she was suing him for child support.
"Liza isn't after millions of dollars; she is simply seeking child support and no amount has yet been set. If they don't settle on a figure, the case will go to a public trial."