The Icelandic Meteorological Office (IMO) said "an eruption has started on the Sundhnuksgigar Crater Row" north of the fishing village Grindavik.

Live video feeds showed lava spewing out of a fissure in the ground.

The meteorological agency said a helicopter would be dispatched "to confirm the exact location and size of the eruption".

The IMO warned earlier that an eruption could be imminent as "an earthquake swarm" began in the early morning on the in a similar fashion to previous eruptions.

The swarm was followed by deformations and pressure changes in boreholes operated by energy company HS Orka.

"Both independent measurements were a clear sign of the onset of a magma intrusion," the IMO said.

Broadcaster RUV reported that authorities had begun evacuating Grindavik.

An eruption hit the area as recently as November, which in turn was the seventh eruption in a year.

Most of Grindavik's 4,000 residents were evacuated in late 2023, shortly before the first volcanic eruption in the area.

Since then, almost all the houses have been sold to the state, and most of the residents departed.

RUV said the region's police commissioner, Ulfar Ludviksson, reported that recently, around 40 houses in Grindavik were occupied by residents.

Volcanoes on the peninsula had not erupted for eight centuries until March 2021, when a period of heightened seismic activity began.

Volcanologists warned that volcanic activity in the region had entered a new era.

Iceland is home to 33 active volcanic systems, more than any other European country.

It is located on the Mid-Atlantic Ridge, a fault in the ocean floor that separates the Eurasian and North American tectonic plates and causes earthquakes and eruptions.