A Finance Department spokesman issued a statement confirming details of Flaherty's condition following a deeply personal interview with The Globe and Mail published Thursday.
"Minister Flaherty has disclosed that he is undergoing treatment for a non-life threatening, but serious dermatological condition known as bullous pemphigoid," wrote Dan Miles, Flaherty's director of communications, in a note to CBC News.
"To help clear up the condition the minister has been prescribed a steroid called prednisone. This treatment has side effects such as bloating, weight gain, redness in the face and bouts of sleeplessness," the statement said.
"This treatment has in no way impacted Minister Flaherty’s ability to do his job, as he has been dealing with this health issue for nearly a year now while carrying out his duties as Minister of Finance, Regional GTA Minister and Whitby-Oshawa MP," Miles said.
Treasury Board President Tony Clement told reporters he first learned of Flaherty's illness from the Globe interview.
"I certainly wish him well, and I'm glad to hear his health is improving, that's a great relief. I'm just glad that it's now being dealt with and he's on the right medication apparently and it's all good news," Clement said on Parliament Hill.
Clement bristled when asked whether Flaherty should have admitted he was battling health problems earlier.
"At some point you have to wonder whether it's fair to ask those kinds of questions of people," Clement said. "We have private lives as well and I think there is at least a little smidgen of our lives that should not be open to media attention."
Clement said it's legitimate to ask about a minister's health in cases such as a debilitating illness. "But in this case it is not germane because it has not had [an effect] on [Flaherty's] ability to do his job."
Clement said there was no talk of Flaherty's health within caucus.
"When I look at Jim Flaherty, I saw a guy who was working hard for Canada and Canadians, doing a great job, and that certainly didn't change," Clement said.
Change in his appearance
Pemphigoid is a rare blistering skin disorder that can produce lesions on parts of the body.
Flaherty has had to field questions from colleagues and others about his health and the noticeable change to his appearance, which has included redness and weight gain.
"The minister says the condition is clearing up and he is hopeful his appearance will return to normal in the near future. Minister Flaherty will continue carrying out his day-to-day responsibilities and will not be commenting further on his condition," Miles wrote in his note to CBC.
Flaherty, 63, told the Globe in the interview from his Parliament Hill office that while he is reluctant to speak about his health, he wanted to assure Canadians that neither the condition nor the medication affects his ability to do his job as finance minister.
"Most people are quite cautious about what they say, but a few people have said to me, 'Do you have cancer? ... What's going on? Are you going to die?' That kind of thing," he told the Globe. "And, obviously, I am not. I mean, I will die eventually, but not over a dermatological issue."
Flaherty told the Globe he informed Prime Minister Stephen Harper of his condition and treatment last year before Christmas.
Fellow politicians were sending their good wishes to Flaherty on Twitter Thursday morning.
Opposition House Leader Nathan Cullen tweeted, "Sorry 2 hear about Min Flaherty's illness. Glad it's not more serious."
"Wishing Jim Flaherty a speedy recovery," wrote interim Liberal leader Bob Rae.
"Sorry to hear of Jim Flaherty's illness. Wish him a complete and quick recovery," said Liberal MP Ralph Goodale.