Natural disaster declared in Bali as authorities prepare for eruption of island's largest volcano

A natural disaster has been declared in areas of Bali as authorities prepare for the eruption of the island's largest volcano.

More than 35,000 people have fled villages around Mount Agung as frequent tremors rattle the region.

Authorities imposed a 12km exclusion zone around the crater of Mount Agung, as increasing volcanic activity on Sunday sent strong tremors through areas in the eastern part of the one of the world's most popular tourist destinations.

More than 1,000 people were killed when the volcano last erupted 54 years ago.

Officials announced they had raised the warning for Mount Agung to the highest possible level on Friday following the increased volcanic activity.

In the shadow of Mount Agung, evacuation centres are filling fast while people wait and watch, hoping the homes they've left behind will still be there when they return.

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"There's already a dark, thick, black cloud at Mount Agung, and earthquakes," one man said.

There have been more than 1,000 tremors since Thursday, a sign Bali's largest volcano is waking up, but not necessarily about to blow.

The volcano did something similar in the early 2000s without erupting.

Up to 50,000 Australians are expected to fly to Bali over the school holidays.

All airlines say they are still flying for now with Virgin being extra cautious, informing passengers on some Bali-bound services that it will be making refuelling stops in Darwin in case there is an eruption and the plane needs to turn around.

Airlines need to be wary of the situation as volcanic ash clouds can cause serious damage to a plane's fuselage and engines.

Officials have urged the public to remain calm amid false reports and videos circulating online of an eruption.

Mount Agung last erupted in 1963, killing 1,100 people after big clouds of 600 degrees of material flew at hundreds of kilometres an hour down the sides of the volcano.

The tremors are caused by magma pushing towards the surface.

Thousands of evacuees were being housed in makeshift shelters including town halls and school gyms and tents in villages around the volcano, and authorities expect the numbers to climb.

"The biggest challenge is we can't predict the number of evacuees," Putu Widiada, head of the local disaster management agency in Klungkung district, said.

"If the number of evacuees exceeds our maximum capacity, we have asked that every public hall in the district be prepared to become evacuation camps."

The shelters were well stocked with food, water, blankets and tents.

Experts say if the volcano blows, the explosion could be as powerful as the eruption of Krakatoa more than 130 years ago, one of the most deadly volcanic eruptions of modern history.

It's estimated that more than 36,000 people died.