Lindsay Lohan -- The ART Of The House Arrest

Lindsay Lohan plans to spend her stint under house arrest doing lots of painting ... reading ... and relaxing at her townhouse by the beach -- exactly the kind of hard time the judge intended.

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Sources close to the actress tell us ... Lohan is looking at her confinement as a "time to relax, focus on her recovery and figure out her new game plan for her life and career."

Before she started to serve her time -- Lohan stocked up on art canvases so she can paint to release the stress.

We're told Lohan also has a stack of scripts she intends to read -- so she can decide on her next project.

Lohan is confident she will be released from house arrest before her birthday on July 2nd -- and we're told she's already making plans for a sober celebration. 

No wonder she was smiling yesterday.