Michael's wife, Lucie, tells TMZ ... he recently had a breakthrough in his recovery, and he's now able to speak and even walk under his own power.

It's big news for Michael, who has been in the hospital since Memorial Day, when he was rushed to an intensive care unit and put on a ventilator.

Michael's wife says he's still in the hospital and doctors have so far been unable to diagnose a specific disease or syndrome behind his hospitalization.

We're told Michael had an adverse reaction to being on the ventilator ... his wife says his brain stopped communicating with the rest of his body.

So, now he needs to relearn movement and speech, which is why walking is such a milestone for his recovery.

While Michael no longer needs a cane and is able to speak, his wife tells us he still can't sing or play guitar ... but he's working on different exercises to get back his musical talents.

The breakthroughs are nice, but there are still some issues ... Michael's wife says he has PTSD from being on the ventilator and some past personal trauma has been resurfacing during rehab.