Huge bursts of water have been shooting out of the ground in homes and at least one abandoned restaurant hundreds of meters away from swathes of land submerged by a mud volcano on Indonesia's Java island.

Experts say the bursts are caused by underground pressure linked to torrents of mud gushing out of a drilling site near the industrial suburb of Sidoarjo in East Java for more than a year.

"The new bursts are caused by the mudflow. People have to be cautious because the bursts may carry toxic gases such as methane and hydrogen sulphide," Amin Widodo, a researcher from a local university, told Reuters.

Residents said the bursts first appeared about two months ago when a one-meter high geyser of water and gas shot out of the floor of a resident's living room about 800 meters away from the volcano.

Since then, the eruptions have become higher and more frequent.

Earlier this week, a mixture of hot water and fine sand shot as high as five meters from the clay-tiled floors of an abandoned coffee shop next to a railroad.

"I thought it was raining but when I stepped out of my stall I saw that water was bursting out of the restaurant's kitchen," said Lilik, who owns a nearby cigarette stand.

Experts have tried several schemes to plug the torrent of mud, including dropping hundreds of concrete balls into the mouth of the "mud volcano," but have so far failed to stop the flow that has submerged entire villages and displaced 15,000 people.

Some experts say the mudflow could continue for decades.

The government requires PT Lapindo Brantas, the operator of the well from where the mud has been flowing, to pay for stopping and handling the mudflow as well as compensation for directly affected residents.

The government has agreed to cover costs related to the disaster's social impact on people living outside swamped areas.

Lapindo had been told by the government to pay 3.8 trillion rupiah ($425 million) to victims and for efforts to halt the flow, but officials say the cost could double that.

Lapindo and PT Energi Mega Persada Tbk, which indirectly controls Lapindo, dispute the idea the disaster was caused by the drilling and also whether Lapindo alone should shoulder the cost.

Soffian Hadi, deputy of the agency to handle the mudflow, said residents had not allowed authorities to examine the water bursts.

"But it is caused by a strong gas pressure from under the earth that forces water and mud through cracks in the surface."