Liu Xiaobo, 61, was jailed for 11 years in 2009 for "inciting subversion of state power" after he helped write a petition known as "Charter 08" calling for sweeping political reforms in China.
His wife, Liu Xia, was at the hospital as his health deteriorated over the past couple of weeks, but has been under effective house arrest since her husband won the Nobel Peace Prize in 2010.
"We call upon the Chinese government to lift any travel restrictions on his wife and to release her from house detention," Foreign Minister Julie Bishop told the Australian Broadcasting Corp.
On Saturday, Zhang Qingyang, a Chinese official in the northeastern city of Shenyang, said Liu's widow was "currently free", adding that, as a Chinese citizen, her rights would be protected, but he did not reveal her whereabouts.
The comments are likely to irk China, which has lodged "stern representations" with Western countries that made remarks about Liu Xiaobo, and add fuel to its testy relationship with Australia.
Suspicion of China has been growing in Australia of late, fed by concerns that Beijing is using its growing influence to shift public opinion on sensitive policy issues and stifle criticism.
(Reporting by Harry Pearl; Editing by Clarence Fernandez)
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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