Mount Agung began spewing black smoke and ash earlier this week and there are concerns it could lead to a bigger eruption.
The volcano looms over the Indonesian island at a height of more than 3,000 metres. It last erupted in 1963, killing more than 1,000 people and razing several villages.
Authorities have not changed the alert status on Agung, which remains at one level below the highest.
There have been no reports of flight cancellations, although Singapore's Ministry of Foreign Affairs is urging its citizens not to travel to Bali unless it is completely essential.
"Singaporeans should defer non-essential travel to the affected areas of the island at this juncture," it said in a travel notice. You should also be ready to evacuate at short notice."
Eruptions could result in ash clouds that could "severely disrupt air travel", it said.
Indonesia has nearly 130 volcanoes - more than any other country. Many of them show high levels of activity but it can be months before an eruption.
A spokesman for Indonesia's national disaster mitigation agency said via a text message that there had been a "phreatic eruption" with black smoke reaching 700 metres, followed by falling ash, gravel and sand.
"These types of eruptions – called phreatic – are the product of rock that already exists being shattered violently when water heated by the rising magma under Agung quickly turns to steam," according to a blog post on the Discovermagazine.com website.
The disaster agency recommended against any activity within 6-7.5km of the crater. It said that 29,245 people were staying in 278 evacuation camps.
Two months ago, authorities put Agung’s alert status at its highest level, which forced more than 130,000 people to leave their homes. The alert level was lowered to three out of four on 29 October.
Australia left its travel advice unchanged and told citizens to "monitor local media reports, follow the instructions of local authorities, and stay outside the existing exclusion zone".
Bali, famous for its surf, beaches and temples, attracted nearly 5 million visitors last year, but business has slumped in areas around the volcano since September when Agung's volcanic tremors began to increase.
It is unknown how long the volcano may erupt for and it is even possible that the activity is the last that will be seen for some time.
Additional reporting by Reuters.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies