The regional volcanic ash advisory centre in Darwin said winds could carry the ash southwest toward Bali's worldwide airport and Java, Indonesia's most densely populated island.
The airports, which were shut from 3 a.m. local time will remain closed at least until 9 p.m., PT Angkasa Pura, the state-run airport operator said in a statement.
"At this stage, scheduled flights this afternoon and this evening are planned to operate subject to any change in conditions".
Activity at the volcano was high last year and forced the evacuation of tens of thousands of people, but it had been quieter this year.
Its last major eruption in 1963 killed around 1,600 people.
Ngurah Rai airport began operating around 2:30 pm local time (0730 GMT), about 12 hours after it closed in response to Mt. Agung belching smoke and ash.
Air New Zealand said flight NZ245 from Auckland to Denpasar and the return flight NZ246 from Denpasar to Auckland have been cancelled today.
"Denpasar Airport is now closed and we are monitoring the advice from the Volcanic Ash Advisory Center and our team of senior pilots and meteorologists will make an assessment when flights can be resumed", said the statement.
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The queue at Bali's worldwide airport.
It's happening again! All flights to and from Bali, the famous Indonesian resort island will be cancelled after the Mount Agung volcano became active again.
According to a report, the Disaster Mitigation Agency stated that the airport closure will begin from June 29, 2018, until the situation gets normal.
"In the first days of the activity quake shocks were felt after which followed the emission of ash, sand and stones".
An earlier flight on AirAsia was called off before the airport was shuttered early Friday morning.
Indonesia, an archipelago of more than 250 million people, sits on the Pacific "Ring of Fire" and is prone to earthquakes and volcanic eruptions.
Citilink said it will continue all efforts to accommodate passengers seeking to continue their journey.