The eruption at Mount Agung has become magmatic, the country's disaster management agency said, warning that a larger eruption could be imminent.
As a result, the alert status for the surrounding area has been raised to level 4, the highest level.
Scores of flights have been cancelled after the Indonesian volcano belched columns of ash into the sky, according to the several reports.
The National Disaster Mitigation Agency said Bali's international airport had closed for 24 hours and the small international airport on the neighbouring island of Lombok had already been closed on Sunday after the plumes of ash had drifted east.
No eruption took place and those evacuated were later allowed to return to their homes.
Indonesia has more active volcanoes than any other country in the world and sits on the so-called Pacific Ring of Fire, an arc of fault lines circling the Pacific Basin.
Mount Agung last erupted in 1963, killing nearly 1,600 people in one of Indonesia's most devastating eruptions.
Bali, famous for its surf, beaches and temples, attracted nearly 5 million visitors last year.(ANI)