More than two thousands of tourists are
stranded at Ngurah Rai International Airport - with flights grounded until at least 7am on Wednesday.
Experts have raised the alert level to its highest, warning that Mount Agung could erupt at any moment.
Tens of thousands of frightened locals have fled their homes, but it is feared that thousands more have not evacuated because they feel safe or do not want to abandon livestock.
"Plumes of smoke are occasionally accompanied by explosive eruptions and the sound of weak blasts that can be heard up to seven miles (12km) from the peak," the Disaster Mitigation Agency said in a statement after raising the alert level from three to four.
"The potential for a larger eruption is imminent," it warned.
The ash spreading through the sky is potentially dangerous for jet engines. It can also affect other systems on a plane and make it difficult for pilots to see.
On Monday alone, more than 400 flights were cancelled at the airport - affecting more than 50,000 passengers.
The airport on neighbouring Lombok island has now been reopened.
Mount Agung is one of more than 120 active volcanoes extending the length of Indonesia that sits on the so-called Pacific Ring of Fire.
It last erupted in 1963, killing about 1,600 people.
One resident Dewa Gede Subagia, 67, was a teenager during that eruption and told the AFP news agency: "I am very worried because I have experienced this before.
"I hope this time I won't have to evacuate for too long. In 1963, I left for four months."
According to David Pyle, a volcano expert at Oxford University, said: "What we are seeing at the moment are small explosions, throwing out hot gases and fragments of molten rock, or ash.
"The probability of a large eruption is high, but this may take some days or weeks to unfold."
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