Mortar blasts rocked the correctional facility in a western district of the city yesterday evening, hitting the living areas, administrative headquarters and an electrical substation, the city council said in a statement.
The bombardment sparked a mass jail break that saw scores of detainees flee the prison.
"A riot started in the facility and 106 people escaped their place of detention," the statement said, adding that three convicts were seriously wounded by the shelling.
An AFP correspondent at the scene found the prison gates open and rebel gunmen patrolling around.
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A shell hole some 50 centimetres deep could be seen in the asphalt in a jail yard.
A spokesman from the rebel Vostok battalion going by the nom de guerre Koba said that insurgent fighters had come to secure the location over fears that escaped prisoners could try and get arms.
An AFP crew reported hearing sporadic bombardments across the insurgent bastion overnight.
A growing number of civilian casualties have been reported as artillery bombardments have hit hospitals and homes around the beleaguered city.
Over 1,300 have been killed and more than 285,000 people have fled their homes in the east due to fierce clashes in four months of what the Red Cross has already deemed a civil war.