The Grimsvotn volcano burst into life on Saturday in what experts said was a stronger eruption than its last outbreak in 2004. The plume from the volcano shot 20 km (12 miles) into the sky, forming a huge, bubbling mass which seeped above the clouds high over the North Atlantic island.
Experts have said it will probably not cause the same kind of disruption as when Eyjafjallajokull erupted last April, grounding European airlines for days, as its eruptions tend to be smaller and the particles from it less likely to disperse so far into the atmosphere.
Authorities halted flights then due to fears that dust and ash would get into aircraft engines and cause accidents after the cloud was blown into European air traffic lanes.
"There is no reason to expect Grimsvotn's current eruption to produce the volume of finely fragmented ash that caused such disruption during last year's Eyjafjallajokull eruption," said Open University Volcano Dynamics Group expert David Rothery.
"There will be re-routing of some transatlantic flights, but I doubt that it will become necessary to close European airspace. The eruption is also expected to cause local flooding because of escape of meltwater," he said.
Europe's air traffic control organization said on Sunday: "There is currently no impact on European or transatlantic flights and the situation is expected to remain so for the next 24 hours.
"Aircraft operators are constantly being kept informed of the evolving situation," the Brussels-based organization said.
The Isavia civil aviation authority said it had decided to shut the island's main airport, which is about 30 miles from capital city Reykjavik.
"The ash distribution forecast over the next six hours shows that the ash from the volcano will spread over Iceland today, leading to the closure of most Icelandic airports as the day goes on," it added in a statement.
Isavia on Saturday imposed a flight ban of 120 nautical miles around the area.
Grimsvotn lies under the Vatnajokull glacier in southeast Iceland, the largest glacier in Europe.
When it last erupted in 2004 transatlantic flights had to be re-routed south of Iceland, but no airports were closed.