Thank you both for your answers. I don't fully agree with all that you wrote but it has helped me realize how I feel about the whole thing.
@Bluerose- Thanks for your honesty in saying that you feel he lied to avoid hurting my feelings and he may well have done so... but I don't think it's fair to imply that I am in the 'hangers on' group. Yes I've not moved on fully but it is hard when you get completely mixed messages that are extremely hot and cold. Right now he may have lied and completely moved on, I realise that,. or he may still have feelings for me. I don't think I'm in denial thinking the second option is a possibility after him saying 'he's always liked me', 'always wanted us to date' and 'wasn't ready for it to happen... now'... and telling our mutual friends that he was upset because 'he messed up something great.'
That was not the point of me asking this question - knowing his personality he will be awkward whether he 'lied to get out' or if he does have feelings... that's just the way he is. So, I asked this question to ask how would be the best way to get over the awkwardness and be comfortable in each other's company. That's why I asked if I should acknowledge it and say 'we're cool' or whatever to lighten the atmosphere... but by your answers I see that there is no need - being confident and normal and happy in front of him should do the trick anyway.
@talaniman - I have a large social circle and have had no problems having a social life that doesn't involve him. But, he lives with 3 close friends of mine from school - and I don't want to just cut them out of my life over something as silly as this. So, in that sense I can not just exclude myself from seeing him. I also don't feel that I should hide away from him - if anything I think that seeing him and being outgoing and friendly would be a better way of knowing where I stand. Seeing that he clearly sees it as completely over would mean I could too. But, you are right that a small intimate setting would have been too awkward for both of us and so I didn't go - I will wait until they have a party in their house or we go out with a large group in the city centre because then I can be friendly but not have to talk to him or be close to him all night.