The First Hospital of China Medical University in the northeastern city of Shenyang said Liu's family declined to have him put on artificial ventilation, which was necessary "to maintain life".
"The hospital has explained the necessity of tracheal intubation to the patient's family, the family refused the tracheal intubation," the hospital said on its website.
The hospital, which earlier reported that he had suffered organ failure, said the 61-year-old democracy advocate's liver function had deteriorated despite three days of anti-infection and blood treatment.
Liu risks becoming the first Nobel Peace Prize laureate to die in custody since German pacifist Carl von Ossietzky, who passed away in a hospital while held by the Nazis in 1938.
Human rights groups said it was nearly impossible to obtain independent information about Liu's health given that he is in a heavily guarded hospital and his wife, who is with him and also not free.
"What is on display is still the manipulation and control of information and dishonesty of the Chinese government," Human Rights Watch's Asia researcher Maya Wang told AFP.
"The couple has not been allowed to speak freely to anyone," Wang said. "There are some reasons to continue to cast doubt on the assessment of the hospital."
The Chinese government has rebuffed international appeals to let Liu seek treatment abroad, saying he is getting the best possible care from top domestic doctors.
Last Hours Of Life
Liu was admitted to the hospital early last month after he was transferred from prison due to late-stage liver cancer.
The United States repeated calls on Tuesday for Liu to be released and said it was ready to welcome him if he chose to be treated there.
Foreign ministry spokesman Geng Shuang repeated his standard answer earlier on Wednesday that other countries should respect the country's judicial sovereignty and "not interfere in China's internal affairs under the pretext of an individual case".
As the latest report emerged, Taiwan's President Tsai Ing-wen took to Twitter to call on Beijing to free Liu and "allow him to seek treatment wherever he wishes". She reiterated her offer to have Liu treated in Taiwan, which China considers a rebel province.
"If the hospital's information is true, Liu Xiaobo is in his last hours of life," Amnesty International's China researcher Patrick Poon told AFP.
"Even in his last moments, the Chinese government doesn't seem to loosen their grip of control of Liu Xiaobo and his family," he said.
A video leaked earlier this week showed the Western doctors praising their Chinese counterparts as they stood by Liu's bedside.
The video was denounced as propaganda by rights groups while the German embassy said Monday it "seems that security organs are steering the process, not medical experts".
But in an editorial, the state-run Global Times newspaper said the video aimed to show the Chinese doctors' efforts to help him and said "Western forces are politicising Liu's cancer treatment".
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.
Hu Jia, a Beijing-based activist and family friend, sobbed as he heard the latest update, but he said the family may have declined the ventilator out of hope he could survive.
"Perhaps Liu Xiaobo's family still hopes that there can be a ray of light -- hopes that there can be a turnaround," Hu told AFP.
"This is what we hope too. As long as he still has a breath left, then those planes should be ready to take him away at any moment. Xiaobo, hold on."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)