A snowcapped volcano in southern Chile long considered dormant has erupted, causing small tremors in the area and forcing hundreds of people from their homes.

The government declared a state of emergency after the 1,200-meter Chaiten volcano began belching fire and ash Thursday night.

The eruption also caused more than 60 small tremors that shook the Los Lagos region, with such mild seismic activity expected to continue over the next few days, the government's Emergency Bureau said.

Bureau director Carmen Fernandez said up to 1,500 people were evacuated from communities near the volcano, including in the town of Chaiten about 10 kilometres away.

One expert estimated the Chaiten volcano has been dormant for 9,000 or 10,000 years, but said the eruption was not unusual since it is still considered a potentially active volcano.

Charles Stern, a professor of volcanology at the University of Colorado who studied Chaiten, warned the volcano could pose a danger for those living near it.

Chaiten last had "an explosive eruption that generated a very big ash cloud," he said. "I would really worry about the village of Chaiten. I think they would want to get everybody out of there really soon."

By Friday afternoon, the amount of ash falling in the community of Chaiten had decreased considerably, Emergency Bureau volcanologist Juan Cayupi told the Associated Press by telephone.

There were concerns about ash polluting water supplies and air quality. More than 10,000 masks were handed out, said Interior Minister Edmundo Perez.

Communities in neighbouring Argentina were also affected by the spewing ash as the wind carried it over the Andes mountains. Classes were suspended in several Argentine towns.