A volcano has erupted on a mountain near Iceland's capital Reykjavik, where an eruption also took place last year, the Icelandic Meteorological Office (IMO) said on Wednesday.

Images and video published by local news outlet RUV showed lava and smoke spewing from a fissure in the ground.

A "code red" was declared on Wednesday to prohibit airplanes from flying over the immediate site although helicopters would be sent in to survey the situation.

If the outbreak was confirmed to be similar to the fissures seen last year, the aviation alert would likely be lowered to orange, signalling less danger, an agency spokesperson said.

The Reykjanes Peninsula is a volcanic and seismic hot spot southwest of Reykjavik. In March last year, lava fountains erupted spectacularly from a fissure 500to 750 metres (1,640 to 2,460 feet) long.

Volcanic activity in the area continued until September, prompting thousands of Icelanders and tourists to visit the scene.

Unlike the eruption in 2010 of the ice-covered Eyjafjallajokull volcano, which halted some 100,000 flights and forced hundreds of Icelanders from their homes, this eruption is not expected to spew much ash or smoke into the atmosphere.

Located between the Eurasian and the North American tectonic plates, among the largest on the planet, Iceland frequently experiences earthquakes and has high volcanic activity as the two plates move in opposite directions.