Baroness Thatcher had a "good night" in hospital and is talking about the government spending cuts, her son has said.
The former prime minister was admitted to hospital for tests last night after failing to recover from flu.
After visiting his mother, Sir Mark Thatcher told reporters she was likely to remain in the private Cromwell Hospital for a day or two.
He said: "They have started the tests and when they get the results they will make the appropriate decisions."
Sir Mark continued: "She's a little bit drowsy but she had a good night and is slightly sedated at the moment. She's good, chirpy, talking about the CSR, so in good order."
Doctors decided on Tuesday night that she needed to be admitted for assessment.
David Cameron took time out from preparations for the Comprehensive Spending Review to wish Lady Thatcher a "speedy recovery".
Last week the Tory peer was forced to withdraw from a Downing Street reception to mark her 85th birthday after coming down with flu.
Friends said she was still being troubled by the illness on Tuesday afternoon, and aides called in a doctor to assess her condition. She was taken from her home to the hospital in west London shortly afterwards.
Lady Thatcher insisted around 150 friends and former colleagues went ahead with her birthday reception at Number 10 last week despite her absence. Mr Cameron has promised to hold another celebration when she has recovered.
The one-time "Iron Lady" very rarely speaks in public now on medical advice. However, she does still attend a number of high-profile functions.