Thousands have evacuated their homes as Southern Chile's Villarrica volcano spewed ash and lava into the night sky.

Heavy smoke billowed into the air and fiery lava fountains spurted out from the volcano's mouth around 3:00a.m. Tuesday. 

The dramatic eruption prompted some 3,600 residents from nearby towns to flee their homes.

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This is Villarrica's first major eruption in 15 years,  with mudslides from melting snow threatening to hit nearby communities. 

The National Emergency Office immediately declared a red alert.

The 9,000-foot volcano sits on Chile's small city of Pucon, south of Santiago, where about 22,000 people live. 

Interior and Security Minister Rodrigo Penailillo said the bursting volcano is covered by a 40 square kilometer glacier cap. 

Four towns are at high risk of massive mudslides as snow melts.   

Australian tourist Travis Armstrong could not believe his eyes as he witnessed how the volcano spewed ash and fountain-like lava into the air.

"It was the most amazing thing I've ever seen," 29-year-old Armstrong said in a telephone interview from Pucon.

"I've never seen a volcano erupt and it was spewing lava and ash hundreds of meters into the air. Lightning was striking down at the volcano," he said in bewilderment.

The National Service of Geology and Mining was quick to warn people, especially tourists to take extra caution, saying the eruption isn't a fireworks show and that going anywhere near the site could put them in grave danger. 

"It's an unstable volcano, all of its borders are altered," Rodrigo Alvarez, Director of the National Service of Geology and Mining said as he called on people to obey orders to stay away from the angry volcano.

As early as Monday, Chilean authorities had issued an orange alert, that means there was an increased activity at the volcano.  

President Michelle Bachelet declared an agricultural emergency as she flew to Pucon late Tuesday to meet with local officials there.

"You never know when an eruption will take place but what we do know is that the activity is lower, that's visible," Bachelet said.

The situation in Pucon is slowly returning to normal.  Some local residents were bold enough to return to their homes. 

Pucon still looked like a deserted town following the eruption, but more cars are now seen plying the roads. Other business such as banks and restaurants have decided to return to normal operations.

Villarica volcano had been a popular tourist spot for outdoor activities like kayaking, horseback riding and hiking.  It is said to erupt every 10 to 15 years.

About 90 of Chile's 2,000 volcanoes remain active.

TagsChile, villarrica volcano, volcanic eruption, lava flow