Hundreds of personnel from the police, Red Cross and military have been deployed, organizing evacuations and setting up temporary shelters.
Videos published by local media show rescuers attending to people covered in ash and bodies lying on top of lava flows.
Sergio Cabañas, head of the country’s National Disaster Management Agency (CONRED), said the town of El Rodeo had been “buried”.
Other towns affected include Alotenango and San Miguel los Lotes. Rescuers are still trying to reach a number of villages and the death toll is expected to rise.
Fuego is one of Latin America’s most active volcanoes. A major eruption devastated nearby farms in 1974, but no deaths were recorded.
Another eruption in February this year sent ash 1.1 mile into the sky.
Today’s event was on a much greater scale. Hot rock mixed with gas rushed down the mountainside and engulfed villages. Ash reached up to more than 4 miles.
This is Guatemala’s deadliest such event since 1902, when an eruption of the Santa Maria volcano killed thousands of people.
Thousands of people have been evacuated in Guatemala after the Fuego volcano started spewing ash and lava.
Volcanologists said powerful eruptions were catapulting burning rocks as high as 1,000 m (3,280 ft) above the crater and lava was flowing down its slopes.
Local residents reported how the roaring of the volcano shook windows and roofs in nearby villages.
Experts say the eruption of the Fuego, 50 km (31 miles) south-west of Guatemala City, is the biggest since 1999.
Thousands of people have been evacuated in Guatemala after the Fuego volcano started spewing ash and lava
Guatemalan President Otto Perez Molina said the eruption could affect people as far away as the capital.
“We will do the best we can to avoid people being harmed,” he said.
Cars, lorries and buses covered in grey cash could be seen speeding away from the area towards Guatemala City.
Some of those who fled their homes headed for an emergency shelter at a school in the town of Santa Lucia Cotzumalguapa.
Miriam Carumaco, 28, who arrived there with 16 members of her family, said: “We heard loud thunder and then it got dark and ash began falling.
“It sounded like a pressure cooker that wouldn’t stop.”
Head of Emergency Evacuations Sergio Cabanas originally said evacuation orders for more than 33,000 people in 17 towns and villages had been issued.
However, he later said that 11,000 had been evacuated and no more would be necessary as the eruptions had died down by late Thursday.
“It is hoped that by tomorrow [Friday] the volcano will return to normal activity and that families will be able to return home,” he said.
Officials said lava was covering a 7 km (4.3-mile) area on the south and south-western side of the Fuego.
The authorities recommended that air traffic controllers suspend flights in the vicinity of the volcano, as the ash cloud emanating from its crater was spreading quickly.
The 3,760 m-tall (12,336 ft) Fuego is one of Central America’s most active volcanoes.
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