British Athletics performance director Neil Black said on Monday that 24-year-old Scot had "a one percent" chance of competing on the longer distance but Young believes Black was "caught off guard".
"She is looking good for the 1500m and 5,000m," Young told BBC. "She has got the qualifying times and is keen to do both. It is still over a month away and we have got to be cautious around the foot."
"Once he (Black) said it, it was out there. There was a bit of panic that she had a bigger problem than it was. But it has not been that big of a deal, she has not been in pain or limping."
Muir also clarified Black's comments on twitter saying: "Reports of my demise have been greatly exaggerated. Another hard training session completed on the track tonight!"
Muir is one of Britain's leading medal prospects in London following an impressive run at the European indoor championship in Belgrade earlier this year, where she won gold in the 1,500m and 3,000m.
Young said she will miss the weekend's British trials in Birmingham but will compete in three Diamond League events next month.
(Reporting by Hardik Vyas in Bengaluru; editing by Amlan Chakraborty)
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