The lowered alert level prompted local authorities to start allowing more than 34,000 villagers to return to their homes after they had been forced to spend the Christmas and New Year's holidays in evacuation centres.
The Philippine Institute of Volcanology and Seismology (Phivolcs) said there was "less probability of a hazardous explosive eruption" of the Mayon Volcano in Albay province, 360 kilometres south-east of Manila.
The institute noted that for the past four days, no ash explosions had been recorded at Mayon and the number of volcanic earthquakes and sulfur dioxide emissions have declined.
"In view of the observations, Phivolcs is lowering the alert status of Mayon from alert level four to alert level three to reflect the overall gradual decrease of activity," the institute said.
But it warned that Mayon's "overall state of unrest remains relatively high" so people should still stay away from areas within 6 kilometres of the volcano's summit.
A total of 47,563 people were forced to evacuate their homes after Mayon began ejecting lava and ash on December 14.
Albay Governor Joey Salceda on Saturday immediately ordered municipal officials to allow 34,482 displaced residents to go back to their homes around Mayon after receiving information on the lowered alert level.
Only 12,803 people who live within 6 kilometres of the volcano would have to stay in evacuation centres, he said.
The 2,472-metre volcano, famous for its near-perfect cone, has erupted about 50 times since 1616. It last erupted in July 2006, forcing more than 30,000 people to flee their homes.
Mayon's most violent eruption was in 1814 when more than 1,200 people were killed and a town was buried in volcanic mud. An eruption in 1993 killed 79 people. dpa gl ls
- Deutsche Presse Agentur
- Copyright (c) dpa Deutsche Presse-Agentur GmbH