"I'm looking forward to spending the next week with her. We've been in constant phone contact. She's in a great, great place now. I've never heard her so honest, contrite and focused," Daily News quoted Michael, as saying.
"Lindsay is weeding out all the bad. She's taking a step back and revaluating her life. What she tells - her honesty and openness - has brought me to tears. It's beyond words how proud I am of her," he added.
Michael will take his daughter to a remote undisclosed location in Utah as part of out-patient therapy next week.
An insider revealed that counsellors at the rehabilitation centre suggested that Michael is the best person for Lindsay to stay with.
"They believe Michael's the best person for Lindsay to be with now," an insider said.
"Not only is he her dad - someone with her best interests at heart - but he's also someone who successfully turned his own life around after battling substance abuse," an insider added.
A source said that Michael can help her recover and fight the problem because he has been through the same experience before.
"Michael knows he can help Lindsay to continue to win her battle against alcohol and drugs," source said.
"He was in rehab twice himself when he was trying to kick his own addictions - which included alcohol, cocaine and sex.
"He knows the pitfalls and temptations that await someone preparing to leave rehab. He wants to be there for Lindsay now because so many times in the past, he wasn't able to be when she needed him," source added.