Australian flights to and from the Indonesian holiday island of Bali were cancelled overnight, as ash cloud from a recently erupted volcano continue to cause disruptions.

Virgin Australia announced on Thursday morning flights departing Australia would resume as scheduled, but would continue to monitor the conditions in Indonesian airspace.

Flights to and from one of Australia's most popular holiday destinations have been disrupted since Friday, as ash from the Mount Raung volcano on the island of Java 150 kilometers west of Denpasar - has drifted intermittently towards the airport.

Qantas Airways' low cost subsidiary Jetstar and rival Virgin Australia were forced to cancel flights to Bali on Wednesday night due to unfavorable winds pushing the volcanic ash within 40 kilometers of the airport.

Jetstar has yet to make a decision if flights will resume on Thursday.

July is Australia's peak season for overseas holidays with the combination of mid-year school holidays and Australian's escaping the winter chill.