At least 100 police and prison staff, many dressed in riot gear, were deployed to the Aylesbury Young Offenders' Institute after a large group of Asian prisoners ran riot inside the centre.
Sources said that they broke into the officers' mess and workshops and armed themselves with hammers, saws and chisels.
The incident, described by the Prison Service as 'concerted indiscipline', was believed to have broken out during protests as Asian inmates celebrated the festival of Eid, which marks the end of the Ramadan fast.
Early reports that the rioters may have taken five people hostage - including a prison service Imam, were denied by a spokesman for the Prison Service.
Police said that support officers from across Berkshire, Buckinghamshire and Oxfordshire were being sent to the young offenders' institute in Bierton Road, Aylesbury, to assist prison staff in quelling the dispute.
Trouble broke out at the centre, which houses about 400 young prisoners, just before noon. The insitute is home to some of the most violent young inmates in Britain and about 10 per cent were understood to be lifers.
A prison source said that about 80 inmates, aged bertween 17 and 22 years, were taking part in the riot which culminated in them battering their way into the workshops where a range of tools were stored.
'They have apparently managed to grab hammers, saws and other implements and then gone to the Officers' Mess where they have taken sets of knives.
'They are now in a stand-off with prison officers who are working out a co-ordinated plan of intervention to try to restore order,' said the source.
A spokesman for Thames Valley Police said that police from across the Thames Valley were being taken to the scene to the help the prison service.
Some were also using vans to take special metal-detector arches for use when the prisoners were overpowered.
A source said: 'They will need to get each and everyone of them to go under the arch to make sure they haven't hidden any weapons on their bodies for use later.'
Tonight the prison governor David Kennedy was co-ordinating the efforts to restore order and was not available for comment.
Thames Valley Police were first called at 11.46am to the incident , a spokesman said.
There were no reports of any injuries to offenders or staff, she added.
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