Valve's marketing director Doug Lombardi revealed in an interview with Ted Stokes of PC Live! in Ireland that a Half-Life 3 is indeed in the planning and possibly early development stages.

This is in truth a joyous event for PC gamers, and HL 3 is bound to deliver in the way that we know only Valve can! 

umm.. Valve confirmed it because it will be the HL2 episodes rolled into one...

I still remember when I played the original Half-Life the back on its initial release, that game was absolutely amazing, and I thought no game could WOW me like that again....that was until, the release of Half-Life 2!!!

SSJ, I heard somewhere they might be dropping the episodic content in favor of an entire brand new release in the HL franchise, because quite of few people complained about paying for such small episodes, and said they would prefer to pay full price and just wait for a full fledged game.

^ nope HL2 ep3 is in development. As long as you get more then just the episode like you did with HL2: Ep2 then people don't complain.

Right, SSJ, they have specifically said that HL2: Episodes 1/2/3 are "in essence" Half Life 3, but they are now confirming that HL3 is technically and absolutely in development.

If you want to call that HL4, feel free, but that won't be the name of the game, and I don't see people jumping to insist that GTA4 is actually GTA8. 

 No, in the interview, Ted asked how Episode 3 was coming along, and then asked whether there were any updates on a Half-Life 3.  Lombardi said "Episode 3 is not how the story will end, rest assured." IGN also caught a whiff of Valve's intentions earlier this year when a Valve spokesman confirmed that they were working on a project beyond the HL Episodic content.  He would not directly confirm that this was HL 3, but his sly smile as a response to the question was proof enough for many.

I expect a first glimpse of it sometime late next year, probably october or november, but it'll come. Norwegian media caught wind of something as well this summer when visiting Valve's studio, and a Valve spokesman confirmed that the Source engine 2 (temporary name probably) was indeed being developed at the time. 

 I doubt they will name the new engine anything more then Source 2 like Epic names all their engines by uping the number. 

Still thats interesting as Gabe said like last year that Ep 3 is the end. Or was he just saying done with that planet, NEXT. 

 Who knows, I really can't wrap my brain aroung that G-man, something really odd is afoot! What IS Gordon Freeman? What IS Gman? Will Gordon boink Alyx? Will she like it? These questions and many more will hopefully be answered within the next two years or so.

 PS: You're probably right about the engine, the Unreal Engine has bore the same name since its birth, no reason to call it anything unfamiliar after all.

 how about how will whats her face from Portal will effect things? wtf is Black Mesa? How will the portal gun effect things?

Possible Source Engine 2 shots (not official, but damn suspicious...)

http://www.hardforum.com/showthread.php?t=1079321