About 240,000 people are fleeing Bali's Mount Agung precinct in eastern Indonesia with the volcano threatening to erupt at any moment.
The warning was raised to the maximum level four on Friday night, which means a hazardous eruption is imminent for the first time in 54 years.
This could happen within 24 hours.
Locals reported monkeys and snakes fleeing from the mountain.
People have also been told to evacuate from within a nine to 12 kilometre radius after smoke was detected rising 100 metres from the summit on Friday night.
Travel to Bali
The airport is still operating but a series of tremors increasing in intensity has shaken the area surrounding Mount Agung in recent days.
The Australian Department of Foreign Affairs today issued an updated travel warning for Indonesia that said an eruption could impact air travel in the region.
"Contact your airline or tour operator to confirm travel plans," it said.
It also warned Australians to monitor local media and follow the instructions of local authorities.
A Qantas spokeswoman said its meteorologists were keeping a close eye on conditions and the airline would make changes to flights if the situation escalated.
"We are closely monitoring the activity of Mount Agung, but there is no impact to our services at this stage," the spokeswoman said.
Mount Agung, which is 71 kilometres from the tourist destination Kuta, last erupted in 1963, killing 1100 people.
The large volcano has a peak 10,000 feet above sea level.
Hundreds of tremors
About 500 tremors were recorded in the region of Mount Agung on Friday between 6am and 6pm local time alone, with the highest measuring 3.6. The tremor was 29 kilometres deep.
The last reported earthquake in the precinct occurred about 5am Saturday local time and measured 3.7. It had a depth of eight kilometres and caused locals to panic.
The Volcano Observatory Notice for Aviation said seismic activity showed a tremendous increase in numbers and activity.
"This number of seismicity is an unprecedented seismic observation at Agung volcano ever recorded by our seismic networks," it said in a statement.
It said its monitoring data and analysis indicated an increased probability of eruption but it could not estimate exactly when it would take place.
National Disaster Mitigation Agency spokesman Sutopo Purwo Nugroho announced on Friday night the warning level had been raised from level three to level four.
"With the expansion of the hazardous zone area the refugees will increase " he said.
Mr Sutopo urged people to "calm down" and not be provoked by misleading information.
"Until now Mount Agung has not erupted. Monitoring has intensified."
Centre for Volcanology and Geological Hazard Mitigation Kasbani said on Friday night that the evacuation from the affected area should begin immediately.
"The development today is quite extraordinary, the intensity of it," he said.
Evacuees, who are living in tents or sports centres, need assistance with nappies, sanitary napkins and baby food. There is also a huge demand for public toilets.
Locals were reportedly attempting to sell their cattle for half the usual price as of Friday morning before evacuating.
Emeritus Professor Richard John Arculus from the Australian National University wrote that although infrequent, eruptions of Mount Agung have been among the largest of the past 100 years of global volcanic activity.
"Mount Agung is one of many similar volcanoes in Indonesia and the ring of fire surrounding the Pacific and eastern Indian oceans," he wrote in upi.com.
"But during its sporadic eruptions, Agung has been one of the most prominent injectors of volcanic ash and sulphur dioxide into the atmosphere."
Professor Arculus said the ability to predict eruptions had improved dramatically and it was hoped the high death toll of 1963 would not occur again.
The 1963 eruption was also preceded by earthquakes. Lava and small explosions of volcanic ash began in February leading to a major explosion on March 17.
There was an eruption of similar intensity in 1843 and several in the 16th to 18th centuries.
smh.com.au, with Joe Hinchliffe