"His Holiness Pope Francis rested well during the night. His clinical picture is gradually improving and he is continuing his planned treatment," spokesman Matteo Bruni said on Thursday.
"This morning after breakfast, he read some newspapers and resumed work," he said.
Indicating that he was not confined to his bed, Bruni's statement said he had prayed in the small chapel within his private hospital suite.
Bruni did not say when Francis might leave Rome's Gemelli hospital. The Vatican said on Wednesday he was expected to spend a "few days" there.
The Pope was unexpectedly taken to Gemelli after complaining of breathing difficulties, raising fresh concerns over the health of the 86-year-old pontiff, who is suffering from a number of ailments.
Italian news agency ANSA reported earlier that nursing staff were "very optimistic" that, barring surprises, the Pope could be discharged in time for Palm Sunday celebrations on April 2 - the start of a hectic week of ceremonies leading to Easter Sunday on April 9.
It was not clear if the Pope would be able to take part in the various services, even if he was discharged by the weekend.
Last year, the Pope attended but did not preside at some of the Easter services due to his knee pain. If the same happened again, a cardinal would be appointed to celebrate the services. If the Pope is fit, he could follow events from a chair.
ANSA, quoting unnamed hospital sources, said doctors had "for now" ruled out heart problems and pneumonia for Francis. The Vatican has also said he does not have COVID-19.
Francis, who this month marked 10 years as Pope, is sometimes short of breath and generally more exposed to respiratory problems. He had part of one lung removed in his early 20s when training to be a priest in his native Argentina.
The leader of the world's nearly 1.4 billion Roman Catholics also suffers from diverticulitis, a condition that can infect or inflame the colon, and had an operation at the Gemelli hospital in 2021 to remove part of his colon.
He said in January that the condition had returned and that it was causing him to put on weight, but that he was not overly concerned. He did not elaborate.
In addition, he has the problem with his knee and alternates between using a cane and a wheelchair in his public appearances.
His latest hospitalisation has revived speculation over a possible resignation on health grounds, following the historic precedent of his predecessor Benedict XVI, who died in December.
However, Francis has indicated he would follow the example only if he were gravely incapacitated.
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