Mount Agung, about 75 kilometres (47 miles) from the tourist hub of Kuta, has been rumbling since August and officials have recommended that people stay at least nine kilometres away from the crater.
Hundreds of small tremors have rattled the mountain this week, causing almost 10,000 people to leave their homes as of Friday over fears of a volcanic eruption.
"Tremors happen very often, so we are afraid and I have taken all my family members to the refugee shelter," villager I Wayan Suwarjana told AFP.
National disaster agency spokesman Sutopo Purwo Nugroho advised people to stay calm and not to believe rumours.
The airport on Bali's capital Denpasar, a top holiday destination that attracts millions of foreign tourists every year, has not been affected but airport management are watching the situation closely.
The Australian government put out a travel advisory Friday instructing travellers to exercise a high degree of caution in Indonesia and follow the instructions of authorities.
More than 1,000 people died when Mount Agung last erupted in 1963.
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