Liu, 61, was jailed for 11 years in 2009 for "inciting subversion of state power" after he helped write a petition known as "Charter 08" calling for sweeping political reforms.
He was recently moved from jail to a hospital to be treated for late-stage liver cancer.
The hospital, in the city of Shenyang, made the decision at the request of the family and in consultation with the doctors already treating him, the Shenyang Bureau of Justice said in a short statement on its website.
It provided no other details.
The government has said Liu is being given the best care possible and that he is treated by renowned Chinese cancer experts.
However, a growing number of Western politicians and international rights activists have expressed concern about the quality of Liu's treatment and have said he should be given the choice to leave China if that was the best option.
United Nations High Commissioner for Human Rights Zeid Ra'ad al-Hussein has met Chinese officials regarding Liu, a spokeswomen said on Tuesday.
Chinese authorities told diplomats from Germany, the United States and the European Union on Friday that Liu could not be moved abroad due to his condition.
(Reporting by Ben Blanchard; Editing by Paul Tait)
