The hydrothermal eruption several hundred metres offshore shot water 20-30 metres in the air around 4am near Ohinemutu.

GNS volcanologist Brad Scott described the event as unusual and "slightly anomalous".

Mr Scott said the last major steam eruptions in Rotorua happened 15 years ago, and did not know the cause of today's activity but said the event was a "steam hydrothermal eruption" rather than a geyser.

Local Ohinemutu resident Lani Kereopa woke to a loud noise around 4am and saying it sounded like a "a big thump and spraying sound afterwards".

She said the eruption was around 25 metres away from her house.

"I stood up, looked out the window...it was pitch black and I was thinking nothing much looks different even though it was dark," she told the Rotorua Daily Post.

Another geyser could be seen erupting shortly after out of the lake, she said.

"I panicked and ran downstairs to wake everyone up to say get out of the house, the village is erupting."

Rotorua Lakes Council said these type of eruptions happen quite regularly, but it was usually just a case of bubbling on the surface rather than creating a geyser.

While it was noisy, it was nothing to worry about, says council geothermal inspector Peter Brownbridge.

"It must have been quite powerful to throw up a big column of water as it did but it's nothing for people to be concerned about," he said.

"We don't see many bigger ones these days although eruptions like this were quite common about eight years ago.

"They blow when the upwards pressure exceeds the capping weight so it can be quite spectacular."

(TVNZ)