Images have been discovered in the coastal districts of Alleppey and Quilon; the most important Budti Kuttan near Ambalappuzha. Buddhism probably flourished for 200 years (650-850) in Kerala. The Paliyam Copper Plate of the Ay King, Varaguna (885-925 AD) shows that the Buddhists enjoyed some royal patronage even in the tenth century. The Buddha idol, at Mavelikkara, shows the clear roots and importance of Buddhist religion in Kerala. The idol of Buddha at Mavelikara is four feet tall, and is perhaps the biggest such statue in Kerala. The statues is in seated posture, resembling Padmasana. A feature common to the idols is that hair has not been engraved on the head.
The decline of Buddhism started in the eighth century with the revival of the Brahminical religion. Buddhism faded away gradually and completely disappeared during the reign of the Vaishnavite Kulasekharas in the 11th century.
What actually happened was that Buddhism was reabsorbed into Hinduism, from which it broke away. Many Keralites, like the Ezhavas, who were once supposed to be Buddhists immigrants from Sri Lanka and local converts, gradually embraced Hinduism.
Buddhism has left its impact on Kerala. Kerala temples show traces of Buddhist art and architecture. Amarasimha, the author of the popular Sanskrit text-book used in Kerala schools until recently, was a Buddhist. Kumaran Asan, the great Kerala poet, was influenced by the great Buddhist religion and wrote the famous, Buddhist poems: Karuna. Chandala Bhikshuki, and Sri Buddha Charitam.
FROM : http://en.wikipedia.org/