Jayalalithaa, the five-time chief minister of Tamil Nadu state, ran her AIADMK party with an iron hand and appointed no second line of leadership or successor.

An hour after her party announced her death late on Monday after a cardiac arrest, state Finance Minister OP Panneerselvam was sworn in to lead economically important Tamil Nadu, a base for auto firms Ford Motor Daimler, Hyundai and Nissan and IT firm Cognizant .

Panneerselvam had stood in for Jayalalithaa in the past, but made it clear he was not replacing her. He declined to take her place at the head of the cabinet table while she was ill and instead had her picture placed there.

His rise to the top job in Tamil Nadu would help allay fears of a power struggle in the AIADMK, built entirely around the cult of Jayalalithaa.

Tens of thousands of people gathered outside a memorial hall in the state capital, Chennai, where Jayalalithaa's body lay draped in the Indian flag.

Many wailed and beat their chests in grief. The funeral was set for later on Tuesday.

Widely known as "Amma" or "Mother", the film star-turned politician had a cult following and there were fears supporters would react erratically to her death.

A crowd had surged toward Apollo Hospital where she lay fighting for her life earlier on Monday on rumours that she had died.

"The level of reverence she inspired, few other leaders had," said a leader of the Congress party, Shashi Tharoor.

Jayalalithaa had gone into cardiac arrest on Sunday night, the Apollo Hospital said, following her admission with fever and dehydration in September. She was 68.

"She was not only our leader, she was our god," said Paasarai Jeeva, a woman who said she had been camping outside the hospital for a week.

State authorities ordered seven days of mourning, schools were shut and thousands of police deployed to prevent her supporters from creating public disorder or from harming themselves in grief.

In the past, when Jayalalithaa faced political problems such as a jail term for corruption, her loyalists threatened to immolate themselves or lie down in streets for buses to run them over.

Prime Minister Narendra Modi was flying to Chennai to mourn her death along with several other cabinet colleagues.

"Jayalalithaa ji's connect with the citizens, concern for welfare of the poor, the women and marginalized will always be a source of inspiration," Modi said.

His ruling Bharatiya Janata Party as well as the Congress, the other national party, have little political presence in Tamil Nadu despite years of efforts to build a base.

Jayalalithaa's AIADMK and bitter rival DMK are the main political groupings, alternating in power.