Six months after announcing that they were taking a temporary break in August 2013, 91-year-old Diana told HELLO! Magazine that Michael and Catherine's 13-year-marriage is back on track.
"They are together. I knew they would work it out," said Diana. "They're both gentle people, not hysterical. They're always very affectionate and easy with each other."
"They spent three long vacations together. Something's working," she added. "They went to Canada, they have a place in Quebec, they went to Bermuda and they went to the Caribbean with the kids on vacation. They've had a lot of time in the last two months."
Catherine and Michael, who have two children Dylan, 13, and ten-year-old Carys, are also living together as a family again after Catherine moved into "a house next door".
Speaking about her daughter-in-law's battle with bipolar disorder, Diana defended Catherine's decision to go public about her illness.
"I knew she was dealing with depression," said Diana I think she felt that [it] was probably going to come out anyway and it was better that it came from her and I think she's right about that."
"She's dealing with it," added Diana, who described the Welsh actress as "open and funny". "She's a very realistic person."
Michael with his mother
While the couple didn't officially confirm that their 13-year marriage was getting back on track, they hinted that things were going well.
When Michael won a Golden Globe for Best Actor for his role in Behind the Candelabra, the 69-year-old took the opportunity to thank Catherine and their three children.
"To Catherine, Carys, Cameron and Dylan – all my love," said tuxedo-clad Michael as he accepted the gong, also mentioning his son Cameron from his previous marriage.
He also commented that things were on the "up and up" during an interview with chat show host Jay Leno.