Evacuation centres and hotels in Bali filled up Tuesday with thousands seeking refuge as a volcano on the Indonesian resort island threatened to explode in a major eruption, forcing the airport to close for a second day.

Stranded tourists hunted for accommodation while frightened villagers living in Mount Agung's shadow made their way to more than 200 evacuation centres as the mountain belched smoke and ash.

The rumbling volcano -- which last erupted in 1963, killing around 1,600 people -- forced authorities to close Bali's airport again Tuesday as experts raised the alert level to maximum.

Towering columns of thick grey smoke have been rising from the crater since last week, and in the last few days have begun shooting as high as four kilometres (2.5 miles), forcing all flights to be grounded until at least Wednesday.

Ash is dangerous for planes as it makes runways slippery and can be sucked into their engines.

The volcano, which looms over one of the world's top holiday spots, could produce a thunderous eruption at any moment, officials have warned.

"The potential is there because magma is at the surface," said Kasbani, the head of the country's volcanology centre, who like many Indonesians goes by one name.

Some 40,000 people have abandoned their homes in the danger zone but as many as many as 100,000 will likely be forced to leave, disaster agency officials have said.

There is a 10 kilometre exclusion zone around Agung, which is 75 kilometres from the beachside tourist hub of Kuta.

As of Tuesday around 440 flights had been cancelled, affecting more than 120,000 passengers in Bali, which attracts millions of foreign tourists every year.

"We are supposed to go back to Germany via Singapore on (Friday) but the situation seems not good," said marooned student Alex Thamm.

"Is it dangerous here? Do you think [the volcano] will explode?"

- 'Nobody's fault' -

Inn operator I Wayan Yastina Joni was among the few hoteliers willing to answer an appeal by Bali's governor and tourism agency to supply free rooms to out-of-luck visitors, though some offered discounts.

"This is nobody's fault," said the owner of the Pondok Denayu Homestay. "It's a natural disaster that no one expected."

Hundreds of visitors joined the mad rush to board buses headed to an international airport in Indonesia's second-biggest city Surabaya -- 13 hours' drive and a ferry ride away -- as torrential rain dampened spirits in the beach paradise.

The airport on nearby Lombok island -- also a popular tourist destination -- has opened and closed several times in the past few days.

Mount Agung's last eruption in the early sixties was one of the deadliest of the 20th century in a country with nearly 130 active volcanoes.

"I am very worried because I have experienced this before," 67-year-old evacuee Dewa Gede Subagia told AFP.

"I hope this time I won't have to evacuate for too long. In 1963 I left for four months."

Roadside signs that read "Volcanic danger zone. No entry!" underscored the potential risks of staying behind, although some evacuees had their doubts.

"The situation has forced us to be here," said I Nyoman Taman.

"I don't want to be here...because no matter how bad it is at home, it's still better than at the evacuation centre."

Experts said Agung's recent activity matches the build-up to the earlier disaster, which ejected enough debris -- about a billion tonnes -- to lower global average temperatures by 0.2 - 0.3 degrees Celsius for about a year.

"What we are seeing at the moment are small explosions, throwing out hot gases and fragments of molten rock, or ash," said David Pyle, a volcano expert at Oxford University.

"The probability of a large eruption is high, but this may take some days or weeks to unfold."

- 'Ring of Fire' -

Agung rumbled back to life in September, forcing the evacuation of 140,000 people living nearby. Its activity decreased in late October and many returned to their homes.

However, on Saturday the mountain sent smoke up into the air for the second time in a week in what volcanologists call a phreatic eruption -- caused by the heating and expansion of groundwater.

So-called cold lava flows have also appeared -- similar to mud flows and often a prelude to the blazing orange lava of popular imagination.

Indonesia, the world's most active volcanic region, lies on the Pacific "Ring of Fire" where tectonic plates collide, causing frequent volcanic and seismic activities.