Mitch Winehouse told BBC Radio 1 his daughter would recover "completely" as long as she stopped smoking.
The 24-year-old singer fell ill last week after fainting at her London home.
"With patience, her lungs will recover completely and she's responding brilliantly to treatment - she's actually flourishing," Mr Winehouse said.
The star has now been in hospital for a week, but her father said she would perform at the Glastonbury Festival and Nelson Mandela concert this weekend.
He added that doctors had given his daughter permission to perform.