Smile singer - a guest at a party on Flavio Briatore’s yacht - enraged the Formula 1 boss with her antics, which included ripping her bikini top off and having to be rescued from the sea.
Lily, who appeared to be intoxicated, jumped overboard the vessel.
At one point Allen allegedly jumped into the sea and looked like she was going to drown until she was helped out by crew members.
After this, Briatore reportedly told the popstar that she should leave the yacht and she was given a dress to cover herself up.
The incident is the latest in a string of drunken antics for the singer, who is in the French resort for the world famous Cannes Film Festival in the south of France while she takes a break from recording her second album.
Last week, topless pictures of Lily sunbathing were released, but the pop star laughed off the shots, insisting she was happy to be a pin-up.
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