Wednesday for what was confirmed as "a recurrence of pneumonia" on Saturday in his third hospitalisation in four months.
Doctors drained a build-up of fluid, known as a pleural effusion or "water on the lungs", that had developed from the lung infection.
"This has resulted in him now being able to breathe without difficulty," President Jacob Zuma's office said in a statement.
"He continues to respond to treatment and is comfortable."
The update comes after Mandela was said to be in good spirits and making steady progress on Friday.
"Yes, indeed it is a good sign, it's heartening. But as I keep reminding... he is 94 years of age," Zuma's spokesman Mac Maharaj told eNCA television news channel.
There were no details on Saturday on how long he would remain at an undisclosed hospital.
Mandela's recent health troubles have triggered an outpouring of prayers but have also seen South Africans come to terms with the mortality of the revered Nobel Peace Prize winner.
The former president is idolised at home, where he is seen as the architect of South Africa's peaceful transition from white minority-ruled police state to hope-filled democracy.
Nearly 20 years after he came to power in 1994, the first black president remains a unifying symbol in a country still riven by racial tensions and deep inequality.
It is the second time this month that Mandela has been admitted to hospital, after spending a night for check-ups on March 9.
That followed a nearly three-week hospital stay in December for another lung infection and gallstone surgery.
He was diagnosed with early-stage tuberculosis in 1988 during his 27 year jail term and has long had problems with his lungs. He has also had treatment for prostate cancer and has suffered stomach ailments.
'We want him back'
Keertan Dheda, professor of respiratory medicine at the University of Cape Town, said a pleural effusion was the accumulation of water between the lining covering the lung and that of the chest wall.
Having the fluid tapped was a minor procedure, he said.
"One can drain the fluid with a needle and a catheter and in some cases that's all that's needed," he said.
Other cases required the fluid to be chemically broken down if it had formed pockets or a small operation if infected.
"The older you are, the longer pneumonia takes to get better," said Dheda, adding that mortality was also higher.
"It takes a bit longer, everything is a bit slower and a bit more complicated the older you get."
French pulmonologist Jean-Christophe Renaud said Mandela had a good constitution and could recover well.
"But at 94, everything is serious, especially taking into account his previous medical history."
While Mandela's legacy continues to loom large, he has long since exited the political stage and for the large young population he is a figure from another era, serving as president for just one term.
He has not appeared in public since July 2010.
Labour unrest, high-profile crimes, grinding poverty and corruption scandals have effectively ended the honeymoon enjoyed after Mandela ushered in the "Rainbow Nation", but his decades-long struggle against apartheid still resonates.
"The whole country is not happy about the old man's health," Soweto handicraft seller Nhlanhla Ngobese told AFP, wishing him a "speedy recovery".
"We want him back, even though he's an old man, he's an icon to us, a hero to us, we still want his diplomacy."
Away from the public eye, Mandela has grown increasingly frail.
His December hospital stay was his longest since he walked free from jail in 1990.