The government is urging 700 people living beside the Tungurahua volcano near Quito to leave the area as soon as possible.
Tungurahua - which means 'Throat of Fire' in the indigenous Quechua language - has been active since 1999 but began erupting violently on Sunday, sending red-hot clouds of gas up into the atmosphere.
The volcano's eruptions were triggered by a build-up of lava at Tungurahua's core, according to Ecuador's Geophysical Institute.
The South American country's authorities are concerned at the volcano's pyroclastic flow - fast-moving boulders and gas that can reach speeds of up to 450mph and temperatures of up to 1000c (1,830f).
The 16,480-foot (5,023-metre) volcano has now had its warning level upgraded from yellow to orange, just below the highest alert level of red.
Good weather on Monday night allowed the institute's scientists to observe 'the continuous output of incandescent material' from its slopes.
'This activity was characterised by the expulsion of incandescent boulders, rising more than 300m above the crater and rolling down all sides of the volcano,' said the institute.
That prompted authorities to raise the alert level in the impact zone, 84 miles south-east of Ecuador's capital.
Authorities have inspected and prepared shelters ahead of evacuation orders, while the military and police were being told to coordinate efforts in the area, SNGR said.
'Given the level of alert, populations located in risk areas such as Cusua, Juive, Palictahua and Manzano voluntarily evacuated to safer locations,' the relief agency said on Monday.
The Geophysical Institute on Tuesday recommended people leave high-risk areas 'because the current eruption process began abruptly and has generated several pyroclastic flows that have affected the upper flanks of the volcano.'
Several communities in the shadow of Tungurahua, including the tourist town of Banos with a population of 15,000, were forced to evacuate during a violent eruption of the volcano in 1999.
Residents had to wait a year to return to their homes.
A red alert was declared last December when Tungurahua reactivated, prompting a temporary evacuation of residents and tourists.