Indonesians living near a devastating "mud volcano" that has spewed sludge for nearly two years now have another problem to contend with -- flammable gas.

Highly concentrated methane is pouring into nearby residential areas, a government official told AFP Wednesday, as worried locals said they were afraid to cook at home in case they caused an explosion.

Soffian Hadi Djojopranoto, deputy head of the government team managing the disaster, said the gas appeared to be coming from sewage pipes.

"We are in the process of determining whether the gas originates from the mud volcano or was produced from the sewage in the pipes," he told AFP.

The mudflow, near Indonesia's second-largest city of Surabaya in East Java, has displaced about 15,000 households since it began spewing in May 2006.

Djojopranoto said between 130,000 and 150,000 cubic metres (170,000 to 200,000 cubic yards) of sludge a day is still gushing from the "volcano", which has inundated at least 600 hectares (1,500 acres) of land and shows no sign of stopping.

Yayak, who lives near the mudflow, said the gas had been leaking into his family's home for the past two months.

"The smell is so strong. At night, my family feels dizzy," he told the Kompas daily.

Another resident, Sudarti, told Kompas she was afraid to cook in her home and went out for meals rather than risk her home burning down.

The government has earmarked millions of dollars in state funds to compensate the victims of the mud volcano.

But many people here believe a private energy company connected to Indonesia's wealthy welfare minister is to blame for the disaster.