The eruption started at about 10:17pm (22:17 GMT) on Monday on Iceland’s Reykjanes peninsula, turning the sky orange and prompting the country’s civil defence to be on high alert. It appeared to have taken place about 4km (2.4 miles) from the town of Grindavik, the Icelandic Meteorological Office said.

Livestreamed footage of the eruption showed glowing orange jets of lava spewing from a gash in the ground, surrounded by billowing clouds of red smoke.

Iceland has been on high alert for a potential eruption after thousands of small earthquakes rattled the region about 40km (25 miles) south of the capital, Reykjavik, prompting the evacuation in November of the fishing town of Grindavik and the closure of the nearby Blue Lagoon geothermal spa.

Iceland sits above a volcanic hot spot in the North Atlantic and averages an eruption every four to five years. The most disruptive in recent times was the 2010 eruption of the Eyjafjallajokull volcano, which spewed huge clouds of ash into the atmosphere and grounded flights across Europe for days because of fears that the ash could damage aeroplane engines.

Scientists say a new eruption would likely produce lava but not an ash cloud. A coast guard helicopter will attempt to confirm the exact location – and size – of the eruption, and will also measure gas emissions.

Grindavik sits on the Reykjanes peninsula and is close to Keflavik airport, Iceland’s main facility for international flights.