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Plumes of fire and gas are still spewing from the lava field at Holuhraun in Iceland.
The country's largest volcanic system has been hit by thousands of earthquakes recently, prompting fears of a major eruption.
An Icelandair flight entertained passengers by circling over the active Bardarbunga volcano, giving passengers an impressive view.
Seismic activity at the volcano in central Iceland has been increasing in recent years, prompting fears of a 'glacial outburst flood' and disruption to international aviation.
On Sunday, the country's Met Office raised the threat level to red - the maximum - before downgrading it to orange.
Iceland has cut its ash alert level for aviation to orange from red after raising it to the maximum level earlier in the day due to a fresh eruption from a fissure in the Bardarbunga volcano system.
"No ash has has been detected. The Aviation Color Code for Bardarbunga has therefore been reset to orange," the Meteorological Office said in a statement.
New eruptions in Iceland's Bardarbunga volcano system prompted authorities to raise the warning level for the risk of ash to aviation to the highest level of red.
The area has been hit by thousands of earthquakes over the last two weeks and scientists have been on high alert.
In 2010, an ash cloud from the Eyjafjallajokull volcano, in a different region of Iceland, closed much of Europe's air space for six days.
A 5.4 magnitude earthquake struck near the Icelandic volcano Bardabunga this morning, the Icelandic Met Office said.
Several tremors at the Bardabunga volcano over the past two weeks have prompted fears of a repeat of 2010 when the majority of airspace across Europe was closed for six days due to a volcanic eruption.
They earthquake is possibly related to subsidence of the volcano, the office said.
A small volcanic eruption in Iceland's Bardarbunga system has now stopped, and all airspace restrictions have been lifted.
But experts have warned the worst may not be over, with a major eruption causing an ash cloud similar to the 2010 eruption at the Eyjafjallajokull volcano still a possibility.
Nick Petford, a vulcanology expert at the University of Northampton, said:
Exactly the same thing happened in 2010 with the Eyjafjallajokull volcano. The main eruption was in April, but in March there was a fissure eruption which was a precursor to the much larger eruption.
He said scientists would now begin examining the volcano to try to detect any quakes deeper below the surface.
Those are pretty clear evidence that large amounts of magma are being stored within the volcano and that's a good indication it will explode.
The country's Met Office earlier reduced its ash warning level down from red to orange, after finding there was no threat to aircraft.
Iceland has downgraded its volcano alert level back to orange after declaring a small eruption which started overnight was not a threat to air travel.
A minor eruption was reported at the Bardarbunga volcano after more than a week of rumblings and earthquakes in the region, prompting the country's Met Office to issue a red alert.
Steam and ash were seen rising from the 1km-long fissure in the lava field north of the Vatnajokull glacier, which covers part of Bardarbunga - Iceland's biggest volcano system.
Experts say the amount is too small to cause aviation problems, but say a restricted flight zone covering a radius of three nautical miles and an altitude of 5,000 feet remains in force.
Scientists say a small volcanic eruption in Iceland is currently showing no signs that it could affect air travel in Europe.
Several tremors at the Bardabunga volcano over the past two weeks have prompted fears of a repeat of 2010 when the majority of airspace across Europe was closed for six days.
Iceland's meteorological office raised its alert warning to red, the highest level, as they continue to monitor the volcanic system.