Earlier, about 4,000 people were evacuated from Grindavik town.

Regions around  Reykjavik has been experiencing intense earthquake activities for the past several weeks.

The Icelandic Meteorological Office website said: "The intensity of the volcanic eruption, which started about four hours ago, is decreasing."

"This is evident from seismic and GPS measurements. The fact that the activity is decreasing already is not an indication of how long the eruption will last, but rather that the eruption is reaching a state of equilibrium," it said.

"This development has been observed at the beginning of all eruptions on the Reykjanes Peninsula in recent years," the website said.

The eruptive fissure is about 4 km long, with the northern end just east of Stóra-Skógfell and the southern end just east of Sundhnúk.

The distance from the southern end to the edge of Grindavík is almost 3 km.

The Icelandic Meteorological Office said it continues to monitor the activity and is in direct contact with civil protection and response units in the area.

According to reports, the eruption could be seen from Reykjavik city.

One eyewitness in the city told the BBC that half of the sky in the direction of Grindavik was "lit up in red".

He said smoke could also be billowing into the air, with police warning people to stay away from the area.