[The volcano, seen as a slight glow in the background, sits close to the Eyjafjallajokull glacier [AFP] ]

Hundreds of people have been moved from their homes and a state of emergency declared after a volcano erupted in Iceland.

The evacuation in the early hours of Sunday followed the eruption of a volcano beside the Eyjafjallajokull glacier, the country's fifth largest.

"The evacuations have gone smoothly," Kjartan Thorkelsson, the local police chief, said.

Three Red Cross centres were set up in the village of Hella for the 450 evacuees.

The volcano spewed lava and threw up a plume of smoke about one kilometre high, but initial fears that the eruption would trigger flooding calmed after it was found that it had not taken place underneath the 160km-long glacier.

Scientists conducting an aerial survey of the are later said the eruption had not occurred below the ice, lessening the chances of flooding from glacier melt.

"This is the best possible place for an eruption, as the area is not covered by ice," Tumi Gudumundsson, a geologist at the University of Iceland, said in an interview with the national broadcaster, RUV.

Trigger fears

However, scientists also warned that further volcanic activity could be imminent as three previous eruptions at Eyjafjallajokull had all triggered eruptions at Mount Katla, a nother volcano to the east of the glacier.

"What we know is that an eruption in Eyjafjallajokull seems to be a trigger for Mount Katla," Pall Einarsson, a geophysicist, told Icelandic state television.

An eruption at Mount Katla could melt ice at the top of the mountain causing heavy flooding, Einarsson said.

Domestic were cancelled after the eruption due to the risk of clouds of ash interfering with navigation, the Icelandic National Broadcasting Service reported. International flights were order to stay clear of the area.

A European volcanic island in the North Atlantic, Iceland is largely an arctic desert with mountains, glaciers and volcanoes and agricultural areas in the lowlands close to the coastline.

The last time the volcano erupted was in the 1820s.