Mount Raung, about 150 kilometres west of Denpasar Airport, erupted on July 2, emitting plumes of ash which can choke jet engines.
The airline says it will provide an update on tomorrow's flight schedule to the media later this afternoon.
Rebecca Patrick from the Volcanic Ash Advisory Centre said a shift in the movement of the ash plume has prompted the updated assessment that it is too dangerous to continue today's flights.
"Last night, the ash plume was moving to the south of the volcano but there has been a shift in the wind direction at the height that the ash is located," she told the ABC.
"So winds have now pushed that to the southeast of the volcano, so it is now getting quite close to Bali."
Patrick said with volcanic eruptions expected to continue, the threat presented by volcanic ash to flights is serious.
"The most dangerous effect it could have is if the ash gets into the engines of jet aircraft, which is quite hot, that ash can melt and then resolidfy further back in the engine, which could cause a loss of thrust or even possible engine failure."
Australian passengers begin arriving from Bali
Stranded passengers have begun arriving from Bali as the first planes land in Australia this morning.
More than 1000 people have returned via Jetstar, which resumed flights along with Virgin Australia, in and out of Bali's Denpasar Airport today.
But the airlines warn travellers might still face delays as volcanic ash continues to threaten disruption.
On Saturday, Indonesian officials declared Bali's Denpasar Airport safe to reopen as the cloud of ash from the eruption of volcano Mount Raung drifted away.
A Jetstar spokesman said the airline had determined it was safe to fly all scheduled services to Bali on Saturday evening, after careful assessment of the latest Volcanic Ash Advisory Centre (VAAC) information.
The airline will add more flights to its schedule because of the backlog of passengers.
He said flying conditions will allow Jetstar to begin bringing people back to Australia on return services on Sunday.
Mt Raung erupted on July 2, emitting plumes of ash which can choke jet engines. The volcano is about 150 kilometres west of Denpasar airport, the main airport for those heading to Bali.
Denpasar airport was closed on Friday because of the ash, along with nearby regional terminals including Lombok.
The ash grounded planes from Virgin, Jetstar, Garuda and AirAsia on Friday.
-with AAP
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