Liu's tumour has grown, his liver is bleeding and he has kidney problems.
The First Hospital of China Medical University in the northeastern city of Shenyang said Liu's tumour has grown, his liver is bleeding and he has kidney problems.
The hospital said in a statement on its website that it is preparing to take the 61-year-old democracy advocate into emergency care if necessary, adding that "Liu's family members have been informed of the above circumstances".
But human rights activists decried the hospital statement as a delay tactic to prevent Liu from getting his wish of going abroad, where they say he would be free to speak out.
China has faced international pressure to grant its most prominent dissident complete freedom and let him leave the country since he was transferred from prison to the hospital after being diagnosed with terminal liver cancer in late May.
Two foreign cancer specialists examined Liu on Saturday and said he could still safely leave the country, contradicting their Chinese counterparts.
But US oncology expert Joseph Herman from the University of Texas' MD Anderson Cancer Center and German doctor Markus Buchler of Heidelberg University warned in a statement that "the medical evacuation would have to take place as quickly as possible".
Human rights activists said the hospital's latest statement shows the government is dragging its feet.
"As Liu Xiaobo is in late-stage cancer, his conditions can go worse any time," Amnesty International's China researcher Patrick Poon told AFP.
Poon said the government wants to avoid any embarrassments ahead of a key Communist Party congress later this year. The meeting is expected to boost President Xi Jinping's grip on power.
"Allowing Liu Xiaobo and his family to go abroad would risk giving Liu Xiaobo the opportunity to talk to media and other supporters about his views on China's human rights situation," Poon said.
Hu Jia, a Beijing-based activist and friend of Liu's, said the statement may be in response to the foreign doctors' conclusions.
"This is a way of slowing down the process. It doesn't show the patient's situation has deteriorated to the point of falling off a cliff."
Hu voiced concerns that if there is further delay, "Xiaobo may fall into a vegetative coma state, until he eventually cannot get free".
About 30 protesters staged a sit-in outside China's liaison office in the semi-autonomous city of Hong Kong on Monday, holding large pictures of the Liu and chanting "free Liu Xiaobo!". They said they would remain until the pair were allowed abroad.
Asked whether Liu would be allowed to leave the country, Chinese foreign ministry spokesman Geng Shuang told reporters: "This is not a diplomatic question. It's China's internal affairs. We oppose any country interfering with China's internal affairs using these so-called individual cases."
German government spokesman Steffen Seibert told a regular press briefing Monday that he did not know if the hospital’s latest statement meant Liu was unable to travel, but that Berlin hopes Beijing will make a "humanitarian gesture (for Liu) and his family."
Liu was arrested in 2008 after co-writing Charter 08, a bold petition that called for the protection of basic human rights and reform of China's one-party Communist system.
He was sentenced to 11 years in prison in December 2009 for "subversion". At the Nobel Peace Prize ceremony in Oslo in 2010, he was represented by an empty chair.
Another dissident close to the family, Ye Du, said Liu Xiaobo wants to go abroad for the sake of his wife, Liu Xia, who has been under house arrest since 2010.
"It's his personal wish to go abroad, because Xiaobo is very clear about his current situation -- which is that if he doesn't get out now, then he has no way to obtain freedom for his beloved wife Liu Xia," he said, noting that since yesterday friends have been unable to contact any of the pair's family members.
Ye cast doubt on the objectivity of the hospital's statements and treatment decisions, stating they were "severely impacted" by the ruling Communist party's agenda.
"Authorities don't want Liu Xiaobo to go abroad because even if his life there would be short, as a Nobel prize winner he might speak out politically," he said.
"So they must detain him until death. Even in death they won’t let him go."