Thousands of people had gathered at the temple precincts to witness the display of fireworks which was underway since midnight when the blaze erupted at around 3.30 AM, police said.
The mishap occurred as sparks of the fireworks fell on the store room 'Kambapura' and the fire crackers kept there exploded with a deafening noise, police said.
In the huge blaze, 102 people perished and 280 were injured, Chief Minister Oommen Chandy told reporters.
A massive effort was launched to rescue the people from the inferno and shift the injured people to hospitals, with the Navy and the Air Force pressing into service six helicopters and one Dornier aircraft.
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The Chief Minister said the District Collector of Kollam had not given permission to conduct the fireworks.
She said the temple authorities had asked for permission to conduct competitive fireworks which was denied. For normal fireworks, no permission was sought and hence there was no question of granting it, the DC said.
Police sources said a case has been registered against temple authorities and explosive licencees under section 307 (Attempt to murder), and 308 (Attempt to commit culpable homicide) of IPC and under section 4 of Explosives Substances Act.
Prime Minister Narendra Modi, who termed the incident as "heart-rending" and "shocking", announced Rs two lakh each as compensation for the next of the kin of the dead and Rs 50,000 each for the injured.