Watch: Lorraine speaks about visiting Deborah James in hospital
Kelly - who has worked with James on her bowel cancer awareness campaign No Butts - told viewers: "I always thought she'd bounce back, but she's being very well looked after by the people that love her."
The 62-year-old presenter added: "She always bounced back and I just expected her to. I went to see her in hospital recently and although she was thin, she was making everybody laugh, she was her usual self and I thought this is just a wee hiccup along the line."
James - who was diagnosed with incurable bowel cancer in 2017 - has revealed on social media that she has stopped receiving treatment and is receiving hospice care at home.
She said: "The message I never wanted to write. We have tried everything, but my body simply isn’t playing ball. My active care has stopped and I am now moved to hospice at home care, with my incredible family all around me and the focus is on making sure I’m not in pain and spending time with them. Nobody knows how long I’ve got left but I’m not able to walk, I’m sleeping most of the days, and most things I took for granted are pipe dreams. I know we have left no stone unturned. But even with all the innovative cancer drugs in the world or some magic new breakthrough, my body just can’t continue anymore."
Watch: Deborah James talks about saying goodbye to loved ones amid cancer treatment
James went on to announce that she was setting up a new cancer research charity in her name Bowel Babe Fund, and asked followers to "buy me a drink to see me out this world", by donating to the fund.
Within 16 hours over £1million had been raised, smashing the £250,000 target, and the amount continues to rise.
Kelly said: "I keep refreshing this and it's making me feel better. It just keeps going up and up. What a wonderful way to say thank you to Deborah for all she's done and all she continues to do. She is amazing."
The TV host added: "She's removed the stigma about bowel cancer. She's already saved lives. We'll never know how many lives she's saved.
"She's just remarkable - Deborah if you're watching, we're sending you all our love."
James launched the BBC Radio 5 podcast You, Me & The Big C in 2018 with fellow cancer patients Lauren Mahon and Rachael Bland.
Watch: Deborah James about how lockdown impacted on her cancer treatment