Indonesian authorities are preparing to evacuate residents by force as Bali's Mount Agung volcano threatens to erupt and ash-laden skies left hundreds of thousands of holidaymakers in limbo.

The number of affected visitors on Wednesday totalled 120,000 as experts warned earlier that a major eruption was "imminent" and authorities closed Bali's Ngurah Rai International Airport until Thursday morning.

Increased activity detected inside Mount Agung overnight suggests an eruption is likely, with volcanic rocks the size of fists reported at villages four kilometres from the summit on Tuesday afternoon.

Volcanic ash has also been detected up to seven kilometres in the skies above the summit of Mount Agung which is 72 kilometres from the popular holiday destination of Kuta.