"Over the last two days the condition of Mr Sharon has worsened on the level of the kidneys and an examination of the brain showed a deterioration in the cerebral tissue," said a hospital spokeswoman.
Mr Sharon is being treated at Tel Hashomer hospital in Tel Aviv.
Another hospital spokeswoman said there was no "immediate threat" to his life. Doctors were "keeping a close eye on him" but were not planning any medical intervention for the moment, she said.
The decline in Mr Sharon's condition came as Israel battles Hezbollah militants in south Lebanon.
He was moved from a Jerusalem hospital in May to the Tel Hashomer hospital for long-term treatment.
The 78-year-old, who left public life as one of Israel's most popular prime ministers, suffered a massive brain haemorrhage in early January after which he fell into a coma from which he has not emerged.
The stroke signalled a dramatic end to the career of the former general who was on course at the time for re-election as the head of the newly-created Kadima party.
He was succeeded on a temporary basis by his close ally Ehud Olmert who subsequently led the Kadima party to a less than convincing victory in a March general election.
Mr Sharon called the election in November on the same day that he quit his long-time political home in the right-wing Likud party, fed up with battling hardliners who refused to forgive him for unilaterally pulling out of Gaza.