In a statement released to The Associated Press, his family said that the 85-year-old Paterno continues to undergo a "regimen of treatments" after being diagnosed two months ago with what they have termed a treatable form of lung cancer.
The family hoped his latest stay would be brief. He most recently was in the hospital last month after re-breaking his pelvis following a fall at home. That stay also allowed Paterno to continue taking his cancer treatments, which have included radiation and chemotherapy.
Paterno had previously hurt his pelvis when he got accidentally hit in practice in August, forcing him to spend most of the regular season coaching from the press box.
"Although these issues have been challenging for Coach Paterno and his family, he has total confidence in his doctors and is determined to make a full recovery," the family said in the statement.
School trustees fired Paterno on Nov. 9 in the aftermath of child sex abuse charges against retired defensive co-ordinator Jerry Sandusky. Paterno, a witness before a grand jury investigating Sandusky, is not a target of the criminal investigation.
Sandusky has denied wrongdoing. He is out on a bail and confined to house arrest while awaiting trial.
The trustees' firing of Paterno has come under scrutiny from several former players, as well as some alumni critical at meetings this week with school president Rodney Erickson about the motivation to oust Paterno.
Others have slammed trustees for what they have called a lack of communication and transparency during a crisis in which Erickson has promised Penn State would be more open and transparent.
Paterno initially announced his retirement at the end of the season on the morning of Nov. 9. That day, he called the scandal "one of the great sorrows of my life. With the benefit of hindsight, I wish I had done more."
The trustees fired him about 12 hours later in a hastily called news conference.
In a statement Thursday, trustees cited the serious allegations and "extraordinary circumstances" in referring to the board's unanimous decision "that Coach Paterno could not be expected to continue to effectively perform his duties and that it was in the best interests of the University to make an immediate change in his status."
Paterno remains employed as a tenured faculty member, and details of his retirement were being worked out and would be made public when finalized. The university intends to honour Paterno's contract as if he had retired at the end of the 2011 football season, the trustees said.
In response, Paterno's son Scott said in a separate statement that "As has become apparent, the termination on November 9, with no notice or hearing, was not handled well.
"Joe Paterno has reiterated from the beginning that the first priority in this crisis is to serve the best interests of the victims," Scott Paterno continued. "He believes strongly that everyone involved is entitled to due process."Suggest a correction