Japan's Meteorological Agency lifted the warning on Zao, a cluster of volcanoes in northern Japan whose highest point is 1,841 metres (6,040 ft), to 2 from 1, meaning that people should avoid going near the crater.
"There is a possibility of a small-scale eruption," the agency said in a statement, noting that a number of small earth movements were detected on Tuesday, along with a slight bulging of the ground in one area.
It also warned of the possibility that volcanic rocks could be thrown as far as 1.2 km in any eruption.
The announcement came a week after a member of Japan's military was struck and killed when rocks from the sudden eruption of the Kusatsu-Shirane volcano rained down on skiers at a mountain resort in central Japan.
Zao, like Kusatsu-Shirane, is a popular resort area famed for its "snow monsters," created by water vapour freezing on trees in winter. Its slopes are packed with skiers in winter and hikers in other seasons.
Japan has 110 active volcanoes and monitors 47 of them around the clock. In September 2014, 63 people were killed on Mount Ontake, the worst volcanic disaster in Japan for nearly 90 years.
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