Bali volcano Mount Agung spat a massive ash cloud 4,000m (13,100 feet) into the skyline after months of seismic activity.
Live webcam footage has shown the volcano ash rise as clouds form across the sky in Bali.
The Government in Bali has warned locals near the volcano to stay away from rivers because of the threat of cold lava.
The cold lava, which has a consistency of concrete, can flow down river valleys at huge speed causing huge damage.
The Bali volcano erupted for the second time in less than a week spewing powerful mudflows containing rocks and volcanic debris into the air.
A spokesman for Indonesia’s Disaster Mitigation Agency (BNPB) warned against going close to rivers near Mount Agung.
Sutopo Purwo Nugroho warned said on Twitter: “Watch out for lahar floods (cold lava) around Mt Agung.
“Lahar floods have already occurred in several places on the slopes.”
Authorities told people within a 7.5km exclusion zone to “immediately evacuate” in an “orderly and calm manner”.
Some major airlines have already cancelled flights to and from the island due to the impending danger of volcanic ash in the skies over Bali.
After resuming flights on Sunday morning, Virgin Australia again cancelled flights on Sunday afternoon following a change in the aviation colour code from orange to red.
In a statement on its website, Virgin said: “Due to the significant volcanic ash and current weather conditions, we have made the decision to cancel the rest of today’s flights to and from Bali as a precautionary measure.”
AirAsia also cancelled its remaining flights to Bali and Lombok.
Indonesia’s disaster mitigation agency said 40,000 people had been evacuated from near Bali’s erupting Mount Agung volcano, but tens of thousands still needed to move.
Mount Agung’s last eruption, in 1963, left more than 1,000 people dead and destroyed several villages.
Police and soldiers distributed masks on the weekend as ash settled on villages and resorts.