Authorities raised Mount Lewotobi Laki-Laki's alert level to the highest of a four-tiered system after several eruptions since Sunday evening, telling locals and tourists to avoid a seven-kilometre (4.3-mile) radius of the crater.
More than 2,600 families living in the area around the volcano on the popular tourist island of Flores were advised to permanently relocate, the disaster mitigation agency (BNPB) said in a statement.
"The mountain cannot be moved. We must move," agency head Suharyanto, who goes by one name, told residents at a temporary shelter, according to a video the agency released Wednesday.
"We must empty the 7 km radius."
The disaster chief said the government would help locals move to a new area or to build houses on land they already own.
The decision was "one of the long-term mitigation steps" in anticipation of future eruptions, said BNPB spokesman Abdul Muhari.
Lewotobi Laki-Laki erupted three times overnight on Monday, shooting ash two kilometres into the sky (1.2 miles), before erupting again on Tuesday.
Residents described their horror when they realised they were in the shadow of an eruption, which they said was initially masked by adverse weather.
"I saw flames coming out and immediately fled. There were ashes and stones everywhere," said 32-year-old hairdresser Hermanus Mite.
More than 10,000 people were affected, BNPB said.
There were multiple tremors and eruptions at the volcano last week, sending columns of ash between 500 and 2,000 metres (6,500 feet) into the sky several days in a row.
Laki-Laki, which means "man" in Indonesian, is twinned with a calmer volcano named after the Indonesian word for "woman".
Indonesia, a vast archipelago nation, experiences frequent eruptions due to its position on the Pacific "Ring of Fire", an area of intense volcanic and seismic activity.
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