Nelson Mandela is responding better to treatment after the "difficult last few days", South African President Jacob Zuma said on the frail anti-apartheid hero's fifth day in hospital.
"I am happy to report that Madiba is responding better to treatment from this morning," Zuma told parliament, using the Mandela's clan name.
"We are very happy with the progress that he is now making, following a difficult last few days."
His announcement was greeted with loud cheers from lawmakers, who, like millions of South Africans, have been on edge over Mandela's latest health scare.
Until now, the government had described his condition as "serious but stable".
Mandela's latest illness has led to a growing acceptance that the Nobel peace laureate may be nearing the end of his life, but Zuma's announcement was greeted with relief in his home village of Qunu.
Working with a cattle drawn cart, Jongikaya Ndzeki, 39, said the announcement was "very good news".
"We need Madiba to come back home. We need him here, here at home, because we love that man," Nzeki, who is of the same Madiba clan as Mandela, told AFP.
Members of his family, no strangers to internal feuding, have come together to be by his bedside in the Pretoria hospital.
"Since Madiba was admitted to hospital, the family has been deeply touched by the outpour(ing) of prayers and the overwhelming messages of goodwill from all South Africans and the international community," said his grandson and clan leader Mandla Mandela.
Zuma paid tribute to Mandela, who was sentenced to life in prison for sabotage 49 years ago on Wednesday, along with seven other anti-apartheid fighters.
"Because of their sacrifices and the foundation that was laid for a free and democratic South Africa, our country is a much better place to live in now than it was before 1994, even though we still have so much work to do," he said.
One of Mandela's co-accused, Andrew Mlangeni, told AFP of Mandela's resolve as they were sentenced.
"On that day Mandela accepted his fate and made it clear that he was prepared to die."
Mandela instead spent 27 years in prison during white racist rule, walking free in 1990 before becoming South Africa's first black president four years later.
A stream of family members have visited him at the Mediclinic Heart Hospital, where only close relatives are allowed access.
His current wife Graca Machel has been at his bedside almost constantly since calling off a trip to London last week.
His eldest daughter Zenani, who is South Africa's ambassador to Argentina, was seen entering the heavily guarded clinic on Wednesday.
Zenani, as well as his two other daughters Makaziwe and Zindzi, and his ex-wife Winnie Madikizela-Mandela, have visited him daily as have some of his grandchildren.
Outside Mandela's Johannesburg home, a group of five-year-olds delivered get-well cards for a man regarded as one of the greatest figures of the 20th century.
"We love you" read one of the cards. "Get well soon Madiba" read another.
A mother and her 16-year-old daughter also passed by the house to leave flowers.
"We want to acknowledge what he's done for this country," said the mother Pippa Allan. "It was an incredible sacrifice for him and his family and he's left us a legacy that we really hope to nourish and encourage in this country."
Mandela's age and his previous medical problems have only added to the sense of fatalism.
He turns 95 next month and has a long history of lung problems since being diagnosed with early-stage tuberculosis in 1988 while in prison.
This is his fourth hospital stay since December.
Two months ago he was discharged after treatment for pneumonia.
In December he underwent surgery to remove gallstones as he recovered from a lung infection. Then in March he was admitted for a scheduled overnight check-up.
Mandela has not been seen in public since the World Cup final in South Africa in July 2010, and has not been politically active for years.
The last images of him to be released publicly showed an unsmiling Mandela looking exceedingly frail at his Johannesburg home.
He was flanked by a smiling Zuma and other officials from the ruling ANC, prompting allegations that the embattled party was exploiting the former statesman for political gain.
The ANC, facing 2014 elections, has lost much of its Mandela shine amid widespread corruption, poverty and poor public services.
Nelson Mandela at a hotel in central London in 2008. Nelson Mandela was responding better to treatment in hospital early Wednesday, South African President Jacob Zuma told parliament.
Profile of South African former president Nelson Mandela
Messages for Nelson Mandela are pictured outside his Johannesburg home on June 9, 2013. Nelson Mandela remained under intensive care at a Pretoria hospital for a fifth day Wednesday battling a potentially deadly lung infection.
A man sells goods on June 11, 2013 on the streets of Johannesburg in front of a newspaper billboard reading "Don't let Madiba go - Qunu villagers." Nelson Mandela remained another day in hospital with no reports of any improvement in his condition which South African President Jacob Zuma described as "very serious" but "stabilised."