"Doctors anticipate that he should be out within the next couple of days... They want to keep him for observation for at least another 24 hours," his daughter the Reverend Canon Mpho Tutu told a press conference in Cape Town.
The 83-year-old Nobel peace laureate was readmitted to hospital on Monday night -- his third visit in as many months.
He was hospitalised twice earlier this year over a persistent infection that his foundation said was a consequence of the prostate cancer treatment Tutu has been receiving over the last 18 years.
"His spirits are quite good," she said, after visiting him Monday morning.
"The nurses all say he's just back to come and see them again and he's willing to concur... It's the right place for him to be right now."
She said her parents were "incredibly grateful" to people "in South Africa and around the world who continue to hold us in your prayers."
The much-loved cleric, who is seen as South Africa's moral leader, shot to worldwide fame during the apartheid era, leading demonstrations against white minority rule in his purple cassock.
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