By Suchitra Mohanty and D.Jose

India's Supreme Court on Monday upheld the right of a former royal dynasty to run the Sri Padmanabhaswamy Temple, one of the world's richest places of worship, after the state government tried to take it over when the family patriarch died.

When one of the vaults of the towering centuries-old Hindu temple in Thiruvananthanpuram in Kerala state was opened in 2011, it was found to hold diamonds by the sackful along with tonnes of gold coins and jewellery - a hoard estimated at over $20 billion.

The Kerala High Court had ruled that year, after public interest petitions, that the Travancore family must give up its custodianship of the temple following the death of its head, Sree Chithira Thirunal Balarama Varma, the last ruling Maharaja of Travancore, in 1991.

But on Monday, the Supreme Court reversed that decision.

"We allow the appeal of the royal family of Travancore. Death does not effect Shebaitship (management and maintenance of the deity) of the Travancore Family," justices U.U. Lalit and Indu Malhotra said in their order.

Several Hindu temples in India have wealth running into billions of dollars as devotees donate gold and other precious objects as gifts to spiritual or religious institutions that run hospitals, schools and colleges.

The Supreme Court said a new committee that the royal family will set up to run the temple, some seven stories high and replete with ornate carvings, will have the right to decide what to do with the temple's wealth, including the contents of another ancient vault yet to be opened."A large number of devotees had prayed for us. The judgement is their victory," Gauri Lakshmi Bai, a member of the family, told reporters in Thiruvananthanpuram.

Writing by Nidhi Verma; Editing by Sanjeev Miglani and Kevin Liffey)