A man who gave his name only as John, and who said he was handling Kray's security at the hotel, asked for his client's privacy to be respected.
The notorious gangland killer, 66, has been at the Norfolk and Norwich Hospital since being released from prison by Home Secretary Jack Straw on compassionate grounds last month.
Kray left the hospital at about 1100BST and was taken to The Town House hotel in Norwich, where he is believed to be staying with his wife.
His wife, Roberta, owns a house in Watton, Norfolk, close to Wayland prison where he was being kept before his release.
A man who gave his name only as John, and who said he was handling Kray's security at the hotel, asked for his client's privacy to be respected.
He said: "He has made his funeral arrangements. He knows he is dying.
"He knows he has a terminal complaint.
"We are hoping that without any pressure this will give him longer to live.
"We are hoping that this will give him a matter of months rather than weeks.
"This is freedom for him. If he is strong enough we are hoping friends will come to see him".
Kray served 32 years of a life sentence for the gangland murder of Jack "The Hat" McVitie.
Ronnie Kray died of a heart attack in 1995.
Solicitor Trevor Linn appealed to the home secretary to release his client from prison when it became clear he was not going to recover from his illness.
His release was requested on compassionate grounds to allow him "the dignity to die in peace at home".
Prisoners can apply for compassionate release under section 36 of the 1991 Criminal Justice Act, but they must meet strict criteria showing they have an exceptional case.