The eruption, the fifth since December, was the most powerful in the area since volcanic systems on the Reykjanes peninsula became active three years ago after lying dormant for eight centuries, according to the Icelandic Met Office.

The town of Grindavik, where only a few people have returned after several homes were destroyed by lava earlier this year, was again subject to an evacuation order, as was the nearby Blue Lagoon outdoor spa, a major tourist attraction.

Volcanic activity decreased late yesterday but remained steady through the night, the civil protection agency said in a statement.

There were no reports of injuries.

“Westerly winds are expected today, and gas pollution may then spread to the east over southern Iceland,” the agency said.

Sensors showed air quality remained “very good” in and around the capital while a station closer to the eruption indicated it was “unhealthy for the sensitive”.

Lava yesterday flowed over the main road that runs towards Grindavik, and images in local media today showed it was partly covered by a large mass of dried black rock.

Lava flows also reached the dykes built around Grindavik, diverting the molten rock west around the town according to the met office.

Keflavik airport, Iceland’s biggest, was operating as usual.