Google has brought out the transliteration feature as an independent product of its own: Google Indic Transliteration. This tool currently will let you type in Hindi, Tamil, Telugu, Malayalam, Kannada using an English keyboard. Type out words phonetically, and let Google convert them into the correct word.

Tamil Transliteration: http://www.google.com/transliterate/indic/Tamil
Hindi Transliteration: http://www.google.com/transliterate/indic/Hindi
Telugu Transliteration: http://www.google.com/transliterate/indic/Telugu
Kannada Transliteratioin: http://www.google.com/transliterate/indic/Kannada
Malayalam Transliteration: http://www.google.com/transliterate/indic/Malayalam