Lani Pallister will have thoughts of godmother Dawn Fraser on her mind at the world short course championships, admitting the sporting icon's health scare had been "frightening".

Olympic gold medallist Pallister headlines Australia's team in Budapest, where her likely 400-metre freestyle final showdown against Canadian young gun Summer McIntosh on Wednesday morning (AEDT) looms as the highlight of the meet.

Pallister won four gold medals at the 2022 world short course championships in Melbourne, announcing herself as a star of the sport.

Fraser joined her on the podium to celebrate that success.

Now, the swimming legend is in hospital on the Sunshine Coast as she recovers from a hip replacement and four broken ribs suffered in last week's fall.

Pallister and her mother Janelle, who is in Budapest as a coach, released a statement expressing their "deep heartfelt concern for Dawn's recent incident".

"Hearing about her fall has been both stressful and frightening, given the relationship we share," they said.

"Dawn is not just an extraordinary athlete and icon, she is an incredibly special part of our life, and her wellbeing is always in our thoughts, regardless of any injury or illness she may face.

"We are relieved to hear that she is doing well and is receiving the care she needs from her family and the hospital staff."

Fraser's family released a statement on Monday night, noting the 87-year-old is "making amazing progress" and already walking.

"Mum has scared the daylights out of us … but to see her up and about today is the best Christmas present we could have asked for," Fraser's daughter Dawn-Lorraine said.

"She is one tough lady.

"Huge thanks to the doctors and nursing staff."

Fraser, who won gold in the 100m freestyle at the 1956, 1960 and 1964 Games, is widely regarded as one of the greatest swimmers of all time.

The eight-time Olympic medallist was the first athlete, female or male, to win gold in the same event at three consecutive Olympics.

Fraser was named Australian Female Athlete of the Century by the Sport Australia Hall of Fame, which also inducted her as their first female member in 1985.

AAP