Sharon's aides say his condition improved considerably overnight and that he is in full control of the government, reports CBS News correspondent Robert Berger. He talked with his aides and doctors and was able to walk around the room and shower unattended.
Sharon returned to the fray just hours after his bitter rival, Benjamin Netanyahu, won the race to replace him as head of the battered Likud Party. Sharon quit the hardline Likud last month because it resisted his plan to move forward on a peace deal with Palestinians.
Sharon's illness raised questions about his ability to lead his new centrist party, Kadima, into March elections, and then lead the country for a third term if he is elected. But he shrugged off those concerns.
"Now I have to rush back to work," Sharon told reporters as he left Jerusalem's Hadassah Hospital. Asked if the stroke affected his performance, he replied: "I don't think it will affect my functioning."
Sharon, 77, was rushed to Hadassah on Sunday evening and had not been seen or heard publicly since then. Doctors said the stroke briefly affected his speech, but did not impair his memory or cognitive abilities, or do permanent damage.
Hadassah official Shlomo Mor-Yosef said there were no major restrictions on the prime minister's activities.
"He obviously could lose some weight, like many people," Mor-Yosef said. "He should scale back his activities. We recommend that he gradually resume his regular schedule over the next few days."
New polls Tuesday showed Sharon — Israel's most popular politician — gaining ground after his stroke, with Likud still languishing. If poll trends hold, Kadima would be able to form a moderate coalition following the March balloting, and a Netanyahu-led Likud would head a right-wing opposition.
Sharon's exit from the Likud left behind a small group of lawmakers, like Netanyahu, who opposed his Gaza Strip withdrawal, and object to further territorial concessions to the Palestinians.
Netanyahu, a former prime minister, captured 44 percent of the vote in Monday's Likud primary versus 33 percent for Foreign Minister Silvan Shalom. Two hardline candidates divided the remaining votes.
Netanyahu, who quit Sharon's Cabinet in protest just before the Gaza pullout, told cheering backers that his victory was the beginning of "returning the Likud to power."
"The country is facing difficult challenges, and I don't think it's headed in the right direction," Netanyahu said in a crowded room in party headquarters. "First of all, we must bring the Likud back to itself and then to the leadership of the country. It begins now, up, up and up."
Netanyahu, 56, a forceful public speaker who served as prime minister from 1996-1999, is Sharon's bitterest rival and could be a formidable candidate, leading an attack on Sharon from the hawkish side, while the dovish Labor Party chips away at the other flank.
The Likud primary fills out a picture of Israel's political scene, which was scrambled by Sharon's decision to leave Likud four weeks ago and labor union chief Amir Peretz's surprise win of the Labor Party chairmanship, beating veteran Israeli statesman Shimon Peres.
In the West Bank town of Bethlehem, about two dozen gunmen briefly seized Bethlehem's city hall on Manger Square and near the Church of the Nativity, demanding jobs in the Palestinian security forces.
Hundreds of Palestinian police and onlookers rushed to the square after the gunmen appeared on the roof of city hall, pointing their weapons toward the crowd. Police sealed the surrounding streets.
After about an hour, the gunmen tied to the ruling Fatah movement, met with the governor of Bethlehem and then walked out of the building. It was not immediately clear how the standoff was resolved.
The incident took place just four days before Christmas. The Church of the Nativity, one of Christianity's holiest shrines, stands over the grotto where tradition says Jesus was born.