The former Neighbours star and singer known for her hit single Torn managed to confuse viewers all the way through the series and was the only character whose identity came as a shock in the final.
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Imbruglia said: "I just loved being Panda, when you put the costume on I would become Panda."
The Australian star said she had spent the entire series speaking in an American accent to keep her identity a secret.
She said that she was surprised Rita Ora, who she knows, hadn't worked out it was her and added: "I just had so much fun, I made friends with a Traffic Cone, a Mushroom..."
One viewer tweeted: "Omg Panda is Natalie Imburglia. Wow. I never saw that one coming."
Someone else wrote: "Whoever guessed Natalie Imbruglia needs to be put on some of the country’s biggest unsolved murder cases because HOW?!"
Speaking afterwards about her reasons for doing the show, Imbruglia said: "I did it for my son. He loves the character I chose. I also thought it would be fun to sing with a mask on, no need to spend hours in hair and make-up. I liked the idea of hiding my identity and putting on an accent to throw people off the scent. I guess it's also an acting gig."
In a very close final vote, she just edged ahead of Mushroom to win series three, who was unmasked as Charlotte Church.
Singer Church showed off the variety of fake accents she'd used to throw viewers off the scent, including Irish and Lancashire accents.
Church told the panel: "You were all saying such wonderful things and it really touched my heart, thank you.
"I've absolutely loved being Mushroom, it's been an absolute ball."
Her reveal came as no surprise to many viewers, who had worked out weeks ago that it was Church.
One fan tweeted: "Charlotte Church please go back to singing again, you're amazing."
Someone else added: "Charlotte Church needs to be in acting with that accent ability! What a Queen."
After her identity was revealed, Church said: "I think the majority of my friends and family will be very surprised because I don't generally do too much in the public eye anymore, as I'm quite a private person," adding: "I've even had to lie to my own mum."
The ecology enthusiast added: "I really love the role that fungi plays on Earth. I think that it's going to be so important in how we fix a lot of the ecological problems that we're currently facing, including things such as soil degradation. So, to be the representative for the mushroom community felt absolutely brilliant, my heart was fit to burst!"
Robobunny, who placed third earlier in the evening, didn't surprise too many people with his unmasking either as plenty of the show's fans had been saying it was Westlife star Mark Feehily for most of the series.
Feehily said that he had taken on the challenge for his daughter: "Doing this has allowed me to explore my voice as well, but I've also spent the last two years with my baby so I've watched a lot of cartoons. This is for Layla."
He said of his Westlife costars: "I told the boys I'm just going to stay in London and chill out for a couple of days and they were like, but you've got a baby in Ireland."
Jonathan Ross joked: "You're going to have to get home or people are going to think you're having an affair."
The three finalists all sang duets with past Masked Singer contestants - Robobunny with Nicola Roberts who won series one as Queen Bee, Panda with Hedgehog, aka Jason Manford, and Mushroom with Aston Merrygold as Robin.
Joss Stone, who won series two as Sausage, returned as a guest judge for the final.
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Asked how the contestants would be feeling, she said: "It's very nerve-wracking, I know that you've got a mask and nobody really knows who you are so it's fine, but this is the night you've got to take it off and you're thinking, 'oh, they're going to find out it's me!'."
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