He had been serving an 11-year prison sentence for "inciting subversion of state power" in Jinzhou, near Shenyang.
Liu, China's most prominent political prisoner, is being treated for late-stage liver cancer.
However, Liu's family has declined the use of intubation machinery to help him breathe with the aid of a plastic tube in his windpipe, the hospital said. The hospital is making every effort to rescue him.
On Tuesday, the doctors treating the activist said he had been suffering from a stomach infection, peritonitis, organ dysfunction and septic shock, a critical condition that can be fatal.
The Chinese government has rebuffed global appeals to let Liu seek treatment overseas, saying he is getting the best possible care from top domestic doctors.
The hospital, which earlier reported that he had suffered organ failure, said Liu's liver function had deteriorated despite three days of anti-infection and blood treatment.
The United States repeated calls Tuesday for Liu to be released and said it was ready to welcome him if he chose to be treated there. "Every moment that passes makes that possibility more hard".
Mr Liu's declining health has become the subject of worldwide attention, with supporters and several foreign governments calling for him to be freed to go overseas for treatment.
"We remain concerned that Mr. Liu and his family are unable to communicate with the outside world and that he is not free to seek the medical treatment of his choosing", she told a regular news briefing.
But the Hong Kong-based Information Centre for Human Rights and Democracy said one of Liu's relatives had told them Liu was conscious and in a better condition after receiving dialysis.
"Despite their loud rhetoric, Western forces are not persuasive in their reasoning".
It also hit out at the German embassy in Beijing for its statement on Monday criticising the Shenyang hospital for releasing unauthorised video of two foreign doctors, one of them German, as they visited Liu.
After the doctors' Sunday statement, China released short videos of their visit, apparently taken without their knowledge, in which the German doctor appeared to praise the care Liu had received.
It added that Liu had a history of hepatitis B before imprisonment and prison authorities had provided him with an annual physical examination as well as monthly checkups, and no abnormal conditions had been found before the recent diagnosis. In another, he commemorated Liu's calls for freedom, referring to the first line of China's national anthem, "Rise up, all those who don't want to be slaves". "Taiwan willing to provide any medical assistance", she said.
It was not possible to confirm the information on Wednesday amid heightened security around the hospital and increased surveillance of Liu's family members to prevent them from talking to his friends and the media.
No one answered the telephone at the hospital's publicity department on Wednesday.