The eruption on the Reykjanes peninsula on Sunday morning led to fires in the fishing town of Grindavík, in the country’s south-west.
The main road has been cut off by lava and, while barriers built in December to protect residents have helped to stop the flow, they have been breached in places.
The developing situation has worried tourists, many of whom visit Iceland in the winter for its famous countryside and scenery.
This is the latest on the situation as of Monday, January 15.
Is it safe to travel to Iceland?
The eruption site at Fagradalsfjall is closed due to ongoing eruption in the vicinity.
Authorities have warned against travel to the Reykjanesbraut area and Grindavík.
Despite this, Keflavik International Airport is operating as normal, and Reykjavik and the rest of Iceland have not been impacted.
Reykjanes is in the south-west of the country but only one small part of the entire country is currently a no-go zone.
What is the current advice from the UK Foreign Office?
The Foreign, Commonwealth and Development Office has not listed Iceland as a country that Britons should avoid.
However, the ministry has given a warning and encouraged tourists to check the situation before embarking on a holiday.
“All roads to Grindavík are closed and you should stay away from the area,” a statement reads.
“Reykjavik and the rest of Iceland have not been impacted. You should monitor local media for updates and follow the authorities´ advice.”
Is the volcano in Iceland still erupting?
After the initial eruption, volcanic activity in the area has slowed down significantly, according to the website Nordic Visitor.
Authorities said on Monday that no casualties have been reported.