Speaking at the birth centenary celebrations of AIADMK founder MG Ramachandran here, he also slammed DMK leader MK Stalin for "dreaming" about dislodging his government.
"Those who have never faced the people through elections are dreaming of coming to power, toppling the government and splitting the AIADMK," Mr Palaniswami said, in an apparent attack on Mr Dhinakaran, a former Rajya Sabha member who is spearheading a rebellion against him in the party.
Mr Dhinakaran, locked in an intense tussle with the Palaniswami camp, has been demanding the resignation of the chief minister.
He has stepped up his attack on Mr Palaniswami and vowed to send "home" his regime, after the AIADMK general council annulled VK Sasikala's appointment to the top party post earlier this month.
The general council, the top policy making body of the AIADMK, had also held that all the decisions taken by Mr Sasikala, including the one appointing Mr Dhinakaran as the party's deputy chief, were "invalid".
"The day dreams of those who want to topple the government are like sand castles, which will soon vanish," Mr Palaniswami said, adding that his government was "very stable".
"He always dreams of capturing power," the Chief Minister said, apparently referring to Stalin's claim that the state government had lost its majority.
Distributing welfare measures among beneficiaries on the occasion, Mr Palaniswami announced that the Tamil Nadu Fisheries University at Nagapattinam would be named after late chief minister J Jayalalithaa.
He also said fishing harbours would be built at Taranagambadi and Vellapallam in the district at a cost of Rs 170 crore and Rs 150 crore respectively.
Deputy Chief Minister O Panneerselvam, who was also present, said "bad times" had started for those with "evil intentions" of toppling the government and splitting the party.
Earlier, Lok Sabha Deputy Speaker and senior AIADMK leader M Thambidurai declared open a photo exhibition here.
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