In addition to the Rs four lakh from the Disaster Relief Fund already announced, Rs six lakh each would be provided from the Chief Minister's Relief Fund, he said.
Speaking to reporters after calling on the families at Nadur village, where the tragedy occurred on Monday, he also said orders had already been issued to provide suitable jobs to the next of the kin of deceased.
A portion of the over 15-foot high compound wall, damp due to heavy rains lashing the area for the past few days, came crashing down on the adjoining four tiled-roof houses in a Dalit settlement in the village, over 50 km from here, killing 17 people, including ten women and two children.
Palaniswami, accompanied by his deputy O Panneerselvam, Local Administration Minister S P Velyumani and MPs and MLAs, consoled the families of the victims and termed the incident as most painful.
Noting that besides the damaged four houses, other dwelling units in the surroundings were also tiled-roof and not safe, he said concrete houses will be built in their place.
The chief minister said his government had already decided to make Tamil Nadu a slum-free state and concrete houses will be constructed for those living in low lying areas, on river banks and in unsafe conditions, he said.
On the demand for registering a case under the ST/ST Act against the owner of the house compound of which collapsed, he said action would be taken in accordance with the law after proper inquiry.
He noted that the owner, Sivasubramanian, had been arrested on Tuesday.
When asked about DMK president M K Stalin's remarks that the district administration failed to remove the wall despite complaints, Palaniswami said the former wanted to politicise each and every issue.
The wall collapsed due to heavy rains and so where was the question of the government's involvement in it, he added.
Stalin claimed despite complaints from the villagers about the stability of the wall, the district collector and officials failed to take action, resulting in the incident.
Police said Sivasubramanian, a textile businessman, was arrested on charges of causing death by negligence.