Aspiring singer Chloe Lattanzi, 23, was seen kissing the girl behind a club in West Hollywood before she fell over on the ground.
Two photographers helped her into a taxi after she collapsed while trying to stand up on her own, onlookers said.
Embrace: Chloe Lattanzi kisses a blonde friend outside a Hollywood club
Better shape up: Chloe appears dazed after falling over
Chloe, the Grease star's daughter from her failed marriage to actor Matt Lattanzi, looked bedraggled in a ripped shirt showing her underwear and ripped jeans.
She stared wild eyed as she made an obscene gesture at paparazzi as she sat on the ground.
It comes a month after she was reported to have collapsed outside an LA strip club after bouncers allegedly turned her and a friend away for being too drunk.
She was thought to have won her battle against the eating disorder anorexia nervosa, which was rumoured to be the reason her budding pop career was put on hold for several years.
But her recent behaviour has sparked fears of a relapse.
Back on her feet: The aspiring singer is helped into a taxi by paparazzi
Chloe's problems are believed to stem from her difficult upbringing growing up in the shadow of her famous mother in Australia and the USA.
She has said in the past she had a lonley childhood while Newton-John, now 61, was busy with her own career following the success of the musical Grease and her 1981 chart hit Physical.
But she suffered a series of set-backs including a battle with breast cancer and the break up of her 11-year marriage to Chloe's father.
In 2005 Newton-John was devastated when her partner of nine years Patrick McDermott mysteriously vanished during a fishing trip off California, only for him to apparently reappear last year in Mexico with a changed name and dyed his hair.
Investigators said he had vanished to avoid debts and so his son could collect a £100,000 insurance payout.
She is now happily married to second husband John Easterling, an Australian entrepreneur.
'Frightened, nervous and anxious': Olivia Newton-John, seen at a Hollywood gala last week with her second husband John Easterling (left) and her Grease co-star John Travolta, has spoken of her daughter's battle with anorexia nervosa
In 2007 Newton-John told a US television show about her daughter's battle with anorexia, which emerged after she was pictured looking painfully thin.
She said: 'There was a time I was in denial about it, I have to admit that.
'You don't want to think anything could be wrong - that's not to say I wasn't frightened, nervous and anxious for her.'
Chloe, then 21, said that the illness had been a 'coping mechanism' for her, adding of her mother: 'I'm proud of her for talking about this. I think she's amazing.' ( dailymail.co.uk )
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