An erupting volcano in Papua New Guinea that has blanketed a town in ash has forced around 5,000 people from their homes, officials said Thursday.

Mount Ulawun -- one of the world's most hazardous volcanoes -- began spewing lava and smoke high into the air on Wednesday.

Chris Lagisa, a community elder, said people had gathered at a church hall to flee on lorries, trucks and 4x4s, clutching sacks filled with belongings.

In the nearby provincial capital of Kimbe, grey ash that had been shot more than 13 kilometres (8 miles) into the air, turning day to night, began to fall on cars and homes.

People downwind from the volcano were advised to take precautions to avoid the ashfall, which can cause respiratory ailments, eye irritation and skin problems.

Images of the volcano early Thursday appeared to show the ash flow easing.

"Parts of (the) erupting column collapsed, sending block and ash flows down the flanks," said Rabaul Volcano Observatory chief geodetic surveyor Steve Saunders.

Initial reports from the provincial disaster committee indicate lava flows had cut through the main coastal road.

Ulawun, on the remote Bismarck Archipelago chain, is listed as one of 16 "Decade Volcanoes" targeted for research because they pose a significant risk of large, violent eruptions.

Saunders said they will be deploying staff today to Ulamona to assess the situation as the eruption continues.

"We are monitoring instrumentally from Rabaul Volcano Observatory and have access to satellite data," he said.

"However due to the continuing eruption (and) the potential for unexpected resurgence, it is recommended that the alert be raised to Stage 2," Saunders said.

National airline Air Niugini cancelled all flights into Hoskins Airport in Kimbe for an indefinite period, and the Darwin Volcanic Ash Advisory Centre issued a "red" warning to international airlines.

Thousands of people live in the shadow of Ulawun, despite its being one of the most active volcanoes in the country.