Doctors had told the 76-year-old actress' four children that she might not survive through the night, but she surprised everyone and delighted doctors by breathing unaided and struggling through her pain to communicate with her family.
"Ms. Taylor is fine," a publicist for the Hollywood legend, told People magazine.
Taylor had been diagnosed with pneumonia two weeks ago and had been taken to a private Beverly Hills clinic.
"The doctors thought they were going to lose her. She is still very sick but she is past the crisis," a source had told American newspapers.
Her representative Dick Guttman said that the rumours about her health had gotten very much out of hand and that the visit to the hospital was to prevent her condition from worsening.
"The rumors which began in England about her health are dramatic, overstated and untrue," Guttman said.
"Her hospital visit was precautionary.
"At present, she is surrounded by family, friends and fabulous jewels," he added.