India's southern Tamil Nadu state is to have another female chief minister, two months after one of India's most influential politicians, J Jayalalitha.

The ruling AIADMK party said Sasikala Natarajan would become the next chief minister following the resignation of the acting chief minister.

A confidante of Jayalalitha, Sasikala was appointed as the general secretary of the party after the latter's death.

Her rise to the top has been rumoured ever since.

"She is the next chief minister of Tamil Nadu. Like Amma (mother), we wanted a strong woman leader to serve the people," party spokesperson CR Saraswathi told AFP news agency, referring to Jayalalithaa by her popular nickname.

O Panneerselvam, who had been filling in as chief minister since October when Jayalalitha was hospitalised, said he stepped down for "personal reasons".

But Tamil Nadu's main opposition party has criticised the decision.

"The people of Tamil Nadu did not vote for anyone from Jayalalitha's household to become CM," opposition leader MK Stalin tweeted, using the acronym for chief minister.

For close to three decades, Sasikala, known as Chinnamma (younger mother) to her supporters, had been an almost permanent fixture in Jayalalitha's life, and was often seen with the former chief minister on public platforms.

Never given any formal role by Jayalalitha in the party or the state government, Sasikala's role was always that of aide and confidante.

But analysts say her proximity to power allowed her and her extended family to wield huge influence in the party and the government.

Sasikala's influence over Jayalalitha also became the source of intense media speculation and tabloid gossip.

They also faced corruption charges. A Karnataka high court order in 2015, which cleared them of involvement in a corruption scandal, paved the way for Jayalalitha's return to power after a setback in September 2014 when a trial court found them guilty of corruption.

India's Supreme Court has heard an appeal in the same case, and has reserved its verdict.