"Dear compatriots, it is with a very heavy heart that we inform you that yesterday the condition of our president deteriorated sharply and, according to doctors, it is evaluated as critical," the statement posted on a government website said.
The terse announcement -- which was also carried in state newspapers and television on Friday -- confirmed that Karimov, 78, was hospitalised last Saturday following a stroke.
Speculation over the president's condition has swept the very tightly-controlled Central Asian nation since officials first said last Sunday that he had been hospitalised, with opposition media based outside the country claiming that he has already died.
Opposition outlet Fergana news agency reported on Thursday that preparation for Karimov's funeral in his hometown of Samarkand was under way, with part of the city centre cordoned off and the streets being cleaned.
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Long lambasted by rights groups for brutally crushing dissent, Karimov has ruled landlocked Uzbekistan with an iron fist since before it gained independence from the Soviet Union in 1991.
Despite persistent claims over his health in recent years, Karimov has not left any clear successor -- with some now speculating that senior regime insiders have started jostling to take his place.
In theory the head of the senate, Nigmatulla Yuldashev, should step in until elections can be held if Karimov dies or is incapable of ruling, but analysts have dismissed him as a water-carrier.
Instead the frontrunners to take over long term are believed to be Prime Minister Shavkat Mirziyoyev, known as a tough-guy enforcer, and Deputy Prime Minister Rustam Azimov.
"The chances for a power struggle are probably low, if only because the elites benefit from the current system and have every incentive to work things out," Scott Radnitz, a regional expert at the University of Washington, told AFP.