Lava spewing from a volcano in Iceland appeared to be flowing away from the only nearby town and the intensity of the eruption was dropping, offering hope that homes would be safe even though seismic activity could last months, officials said on Tuesday.

The government said flights were unlikely to be affected, quashing international travel concerns lingering after chaos that resulted from the ash cloud caused by an eruption on the north Atlantic island in 2010.

The eruption late on Monday on the Reykjanes peninsula in southwest Iceland spewed lava and smoke more than 100 metres (330 feet) into the air after weeks of intense seismic activity.

"The eruption does not present a threat to life," a government statement said. "There are no disruptions to flights to and from Iceland and international flight corridors remain open."

Authorities last month evacuated the nearly 4,000 inhabitants of the fishing town of Grindavik about 40 km (25 miles) southwest of capital city Reykjavik, allowing them back intermittently to check on homes put at risk by the tremors.

Kristin Maria Birgisdottir, 43, a Grindavik resident who has been evacuated since Nov. 10, at first had a hard time believing it when the volcano erupted.

"Everything happened so fast," said Birgisdottir. "I had already put my kids to sleep, and I was already in bed when I saw someone posted that it had erupted. I took a screenshot, and thought to myself that it was a bad joke."

"We are just waiting for somebody to wake us up or to say cut, the filming is over, because it's so unreal. It's hard to believe this is happening," she later added.