Woolfe, a Member of the European Parliament (MEP), suffered two seizures hours after what the party described as an "altercation" with fellow UKIP members.
The 49-year-old party leadership candidate was rushed to hospital in Strasbourg yesterday after allegedly being hit by fellow UKIP MEP Mike Hookem - something the latter denies.
He is expected to be kept in hospital for a further 48 hours.
UKIP has launched an inquiry into the incident in the European Parliament building in Strasbourg, soon after which Woolfe collapsed.
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"He has been observed during the night. He was quite tired and and groggy. The hospital has asked to keep him in hospital.
The incident, understood to be between Woolfe and Hookem, took place during a heated UKIP meeting in the European Parliament.
UKIP sources said "a rumbustious argument" had taken place following claims Woolfe had been considering defecting to the Conservative Party.
Hookem told BBC: "He (Woolfe) came at me, I defended
myself, there was no punches thrown, there was no face slapping, there was no digs, there was nothing. It was as people in Hull would term as handbags at dawn. A bit of a scuffle.
"The other door that he'd come through opened up. I at that point was not holding him, I didn't push him, he fell back into that room onto an MEP that was stood just inside that room.