Sources with direct knowledge tell us ... the two artists linked up on Tuesday and Wednesday of last week to record a new rendition of EJ's "Tiny Dancer."

We're told the song is currently still being mixed. Page Six, which broke the story, reports Britney and Elton actually met up in person at a Beverly Hills studio to cut the song -- and that it's due out through Universal Music in August. Andrew Watt is said to be the overseeing producer. We're told it will be released within a month.

Of course, this is huge news ... as it would mark Britney's official comeback to the music industry -- this after being released from the conservatorship and regaining her freedom.

BS has signaled she wants to get back to work, but has also been taking her time readjusting to a normal life ... and also getting married, among other life adventures. As fans of hers know, Britney still very much has song and dance running through her veins.

She constantly records herself at her home doing new choreography and routines -- and recently, we've heard her clear out her pipes with an oldie-but-goodie song of her own.