Fears that Lugo, a former Roman Catholic priest, may not be working to full capacity or may even have to give up office have cast a long shadow over Paraguay's political future and the final outcome of his ambitious plans for bringing prosperity to the impoverished nation.
Lugo was diagnosed in August with non-Hodgkin's lymphoma, a cancer of the lymphatic system.
Elected in 2008 Lugo continues to enjoy comfortable approval ratings despite effects of the global economic downturn and multiple paternity claims from women he met as a bishop. News of the cancer enhanced his popular standing but Paraguayans have moved toward practical concerns about his diminished abilities.
Critics have their sights set on Vice President Federico Franco as a possible successor who, although loyal to Lugo in public, has had awkward moments with the president.
In a candid comment on future prospects, Franco said: "I'm in the line of succession; if needed I will take office as president. I've already acted as president for over 200 days and what I most want, wish is a quick recovery of President Lugo."
Franco said he had already proved his loyalty to the incumbent, "What's most important for Paraguay and its democratic institutions is the full recovery of President Lugo."
Paraguayan analysts said the country could plunge again into political and economic uncertainty if faced with a post-Lugo election with little time spent on preparing the ground for a smooth transition.
Lugo has enjoyed support of most of Paraguay's neighbors and was promised economic aid and collaboration by Brazil, partner in the Itaipu dam complex.
In 2008, Lugo told The Guardian newspaper: "Without doubt it is possible to resurrect a country like Paraguay. We are people of hope, of faith, and I won't be the one killing that hope of the people. I do believe we will resurrect this country, a country deeply drowned in misery, poverty and discrimination. Because I do believe Paraguay could be different."
Landlocked Paraguay's 6.6 million population has one of the highest income disparities, with about 10 percent holding half the nation's wealth.
Returning from medical treatment in Brazil last week, Lugo said, "This president will continue to undergo a series of treatments to fully repair a somewhat delicate state of health, but I assure you that once we're through this period, we will redouble our efforts."
However, Lugo's failing health was a cue to political partners in his precarious coalition to move away, undermining his government's congressional majority.