The FutureVolc project is funded by the European Union and involves more sensors as well as better real-time data analysis. It is a response to the 2010 eruption of Eyjafjallajokull, which closed down much of European airspace. It is hoped the work will enable better detection of imminent eruptions and map their evolution.
"Volcanoes actually scream 'I'm about to erupt'," Dr Matthew Roberts of the Icelandic Meteorological Office (IMO) told the BBC.
"Before they erupt they show many measurable signs, and it's the challenge for today's volcanologists to actually gather all that information and make use of it in real time and that's exactly what FutureVolc is about."
The programme is being led by the IMO and University of Iceland, but involves 26 different groups including the UK Met Office, British Geological Survey and the universities of Cambridge and Bristol. As part of the project, new monitors will be fitted across the most active regions of the country, including around the Eyjafjallajokull site and Katla, one of Iceland's largest volcanoes.
The monitors can detect minute movements or tremors within the ground and detect any curving of the Earth's surface around volcanic sites (known as "inflation") which could be indicative of magma build-up.