A specialist "Tornado Team" which handles prison riots was sent in to deal with the incident at the privately-run prison in Birmingham, central England.
Security firm G4S, which runs the facility, said it was responding to a "disturbance" that had spread from two prison wings to four during the day.
"Our teams withdrew following a disturbance and sealed two wings, which include some administrative offices," said G4S managing director Jerry Petherick.
A security source confirmed to AFP that riot teams had placed the affected areas in lockdown after inmates overran parts of the prison, with most inmates now shut in their cells.
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A Ministry of Justice spokesman said the incident was ongoing but "the situation is contained, the perimeter is secure and there is no risk to public."
The prison can hold 1,450 inmates and is where alleged mass murderer Fred West hanged himself in 1995.
The latest disturbance is the third in English prisons in less than two months.
In November around 200 prisoners went on the rampage at a jail in Bedford, central England, while the previous month a jail in Lewes, southeastern England, was the scene of a six-hour standoff between inmates and riot officers.
Prison staff took industrial action last month over what union leaders described as the "volatile and dangerous state of prisons", reporting an increase in violence, self harm and deaths in custody.
G4S was embroiled in a security fiasco in 2012 when it failed to provide thousands of guards it had pledged for the London Olympics.
The security firm has also faced criticism over the 2010 case of an Angolan man who died while he was being deported, which saw three G4S guards tried and cleared of manslaughter.
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