"His body has little capability to resist left. We must be ready for anything at any time," Schmidt's doctor Prof. Heiner Greten told Bild.
The Hamburger Abendblatt reported on Monday that Schmidt's daughter Susanne had arrived from England, where she works as a business journalist, to be by her father's side.
Schmidt, 96, was operated on for a blood clot in his leg in early September and left the hospital after two weeks of recovery.
Doctors had said that he should make a full recovery and even encouraged him to resume his famous smoking habit, which he gave up in September.
"Schmidt has been smoking for more than 80 years. He shouldn't worry about having another cigarette. The main thing is that he's moving," cardiologist Karl-Heinz Kuck said at the time.
But his condition has become "drastically worse" in recent days, family and doctors told Bild. The former Chancellor has a high fever and can no longer hold a conversation.
Schmidt was Chancellor for the Social Democratic Party from 1974 to 1982, following his party colleague Willy Brandt, and gave long years of service in Hamburg and at the federal level before that.
In recent years he has been a co-publisher of Die Zeit newspaper.