No one is believed to have been injured in the blast at Barwon Prison, which took place just before 1pm.

Paramedics had been called to the prison, near Geelong, as a precaution, but were later called off. An area of the building was evacuated.

Victoria Police spokeswoman said prison officers had been in the middle of a routine search of an unoccupied cell on Friday when the minor explosion occurred.

The bomb squad has since been called in, she said.

Prison sources initially believed the explosion had been triggered by a parcel bomb while a second bomb was discovered before it detonated.

It has been confirmed the explosive consisted of ground match heads, and not any substance that had been smuggled into the prison.

The explosive package was believed to have been packed in the luggage of a prisoner who was about to be transferred to Port Phillip Prison, according to a source at Barwon Prison.

A department spokesman said there was a small bang during routine intelligence checks at the prison. He said there was no damage to the prison. Corrections and police will investigate.

"It’s being treated as an isolated incident and the prison is operating as normal," he said.

Ambulance Victoria spokesman John Mullen said there were no significant injuries.

He said paramedics were initially called to treat people who had "ringing in their ears" after an explosion but were cancelled on their way there.

Barwon Prison has housed some of the state’s worst criminals, including drug kingpin Tony Mokbel, mass murderer Julian Knight and Matthew Johnson, who murdered gangland boss Carl Williams inside the same prison.

Security and management at the prison  were heavily criticised following Williams' April 2010 death.

- with Tammy Mills and Nino Bucci