Mount Soputan erupted days after a powerful earthquake and devastating tsunami rocked the island, killing more than 1,400 people and injuring hundreds more. Officials believe the death toll will rise over the coming days and weeks.
Although the volcano is situated hundreds of miles from the where the tsunami hit, there are fears that the ash that has been spewed into the sky could hamper aid efforts.
A government volcanologist said it was possible the eruption was accelerated by the magnitude 7.5 earthquake that struck late last week.
"It could be that this earthquake triggered the eruption, but we have seen an increase in volcanic activity since July and this began surging on Monday. Yet we can't say there a direct link, as the mountain is quite far away," said the head of Indonesia's Volcanology and Geology Disaster Mitigation Agency, said on local television.
Kasbani, who only uses one name, said planes were warned to avoid the area as volcanic ash is hazardous to plane engines.
National disaster agency spokesman Sutopo Purwo Nugroho told a separate news conference in Indonesia's capital Jakarta, that no residential areas are within the 4-kilometre danger radius.
The volcano agency said the public should avoid the area nearest the volcano and masks would be made available in the event of ash fall.
Nazli Ismail, a geophysicist at the University of Syiah Kuala in Banda Aceh on Sumatra island, stressed there was no concrete evidence to show the two incidents are linked.
"People talk about the butterfly effect. The concept is that when a butterfly flaps its wings, it can cause a catastrophe," he said. "So it is possible for the earthquake to trigger the volcano eruption, but it's not conclusive. This needs to be further investigated."
UK aid agencies have launched a joint fundraising appeal to try and help the survivors of the natural disasters that have hit Indonesia.
The Disasters Emergency Committee (DEC) Indonesia Tsunami Appeal, which is being launched on Thursday, comes as authorities fear that casualties and the number of people who have been displaced will rise within days.
DEC chief executive Saleh Saeed said: "DEC member charities and their local partners are working closely with the Indonesian authorities to get aid to those who urgently need it, as well as helping survivors to cope with the trauma of the last few days. As the full scale of the disaster unfolds, they are providing emergency relief and are ready to help devastated communities to rebuild their lives.
"There is an urgent need for clean drinking water, food, medical care and shelter. Please give generously and let's save the survivors."
Agencies contributed to this report
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