The sportspersons have alleged that they were being ignored to make the temporary employees permanent even at the sports council.
The 52-year-old was one of the earliest players in Kerala and the first female football coach in the state.
The minister initiated the action taking cognizance of a report published by Malayala Manorama the other day which brought the issue to light.
Officials had been claiming that all the equipment were handed over to the Kerala State Sports Council (KSSC) as per a government order once the Games was over.
Danikutty represented Kerala in 11 National Championships between 1981 and 1993.
The National Games are scheduled to be held in Goa between October 20 and November 4, in which 12,000 sportspersons from across the country will compete for top honours in 37 disciplines.