The rumours were true: Bungie lead network engineer David Aldrige has confirmed the Halo team is working on an MMO.
Speaking at a presentation at GDC, as reported by IGN, Aldridge described the new project as a "massively multiplayer action game".
The confirmation came about in the context of discussing netcode and multiplayer; Aldridge's speech was titled "I Shot You First: Networking the Gameplay of Halo: Reach".
No further details were given, although Aldridge did note the new game is "not WoW in space".
This comment came in response to an earlier rumour claiming the new game would be called Destiny and, yes, be "WoW in space".
The new game will be published by Activision, the first of a ten year, multi-platform agreement with the publisher which sees Bungie retain all rights to original IP.