Mount Agung has been hurling clouds of white and dark grey ash nearly 10,000ft into the atmosphere since the weekend and lava has started to seep down the monstrous mountain.
Eruption alert has been raised to the highest level while the island's international airport has been closed for 24 hours, trapping 60,000 travellers.
David Pyle, a volcano expert at the University of Oxford, has said: 'The worst case scenario would be a repeat of the 1963 eruption, perhaps a little be larger.
'The main areas that will need to be evacuated are 10-12 kilometres from the volcano,' he said. 'There won't be a need for the whole island to be evacuated.'
Pyle said that Agung's behavior is 'quite similar' to the start of the 1963 eruption.
'The probability of a large eruption is high, but this may take some days or weeks to unfold,' he said.
Travel firm Kuoni said in a statement: 'We're monitoring the situation closely and have been in touch with all our customers who are currently in Bali to update them of the situation.
'All our customers are in tourist areas which are safe and unaffected by volcanic activity and well away from the evacuation zone.'
About 40,000 people have evacuated but others have not left because they feel safe or don't want to abandon their livestock.
'Authorities will comb the area to persuade them,' said National Disaster Mitigation Agency spokesman Sutopo Purwo Nugroho at a news conference in Jakarta.
'If needed we will forcibly evacuate them.' About 25,000 people were already living in evacuation centers after an increase in tremors from the mountain in September sparked an evacuation.
Lava rising in the crater 'will certainly spill over to the slopes,' Sutopo said.