An emergency alert has been issued in Iceland after a volcanic eruption this morning sent fast-flowing lava spewing towards a nearby fishing village.

An urgent evacuation has been ordered for the town of Grindavik.

Iceland in recent weeks sought to build barriers of earth and rock to prevent lava from reaching Grindavik, but the latest eruption appeared to have penetrated the defences.

"According to the first images from the Coast Guard's surveillance flight, a crack has opened on both sides of the defences that have begun to be built north of Grindavík," the Icelandic Meteorological Office (IMO) said in a statement.

"Lava is now flowing towards Grindavík.

"Based on measurements from the Coast Guard's helicopter, the perimeter is now about 450 metres (1,500 feet) from the northernmost houses in the town."

Early-morning live streams from the site showed fountains of molten rock spewing from fissures in the ground, the bright orange lava flow glowing against the dark sky.