Although the precise history of the modern idli is unknown, it is a very old food in southern Indian cuisine. One mention of it in writings occurs in the Kannada writing of Shivakotiacharya in 920 AD, and it seems to have started as a dish made only of fermented black lentil. Chavundaraya II, the author of the earliest available Kannada encyclopaedia, Lokopakara (c. 1025), describes the preparation of Idli by soaking Urad dal (black gram) in butter milk, ground to a fine paste and mixed with the clear water of curd, and spices. The Kannada king and scholar Someshwara III, reigning in the area now called Karnataka, included an idli recipe in his encyclopedia, the Manasollasa, written in Sanskrit ca. 1130 A.D. There is no known record of rice being added until some time in the 17th century. It may have been found that the rice helped speed the fermentation process. Although the ingredients used in preparing idli have changed, the preparation process and the name have remained the same.
In ancient Tamilnadu, Puttu or pittu (made out of rice flour)was a very popular food and the recipe was very similar to modern idli .
Idli was derived from a tamil word "Ittu Avi" means pour it (or put it)and steam it. Later it turned into (maruviyadu) Ittavi and then into ittali.
The earliest Tamil writings are traced to about 300 BC, but references to edibles and food habits abound in literature between 100 BC and 300 AD (Idaicchangam). Dosai and Vadai, as said above, were popular. Tamils ate meals of all kinds, as well as fish.
Idli batter is poured into the round indentations of the idli pans (pictured) and placed into a pressure cooker.
To make idli, two parts uncooked rice to one part split black lentil (Urad dal) are soaked. The lentils and rice are then ground to a paste in a heavy stone grinding vessel (attu kal). This paste is allowed to ferment overnight, until it expands to about 2½ times its original volume. In the morning, the idli batter is put into the ghee-greased molds of an idli tray or "tree" for steaming. These molds are perforated to allow the idlis to be cooked evenly. The tree holds the trays above the level of boiling water in a pot, and the pot is covered until the idlis are done (about 10-25 minutes, depending on size). The idli is somewhat similar to the dosa, a fried preparation of the same batter.
In the olden days, when the idli mold cooking plates were not popular or widely available, the thick idli batter was poured on a cloth tightly tied on the mouth of a concave deep Cooking pan or tava half filled with water. A heavy lid was placed on the pan and the pot kept on the boil until the batter was cooked into idli. This was often a large idli depending on the circumference of the pan. It was then cut into bite-size pieces and eaten.