Action has been taken against the jail in charge P S Ambekar, Warden Sampat and Head Constable Gundalli based on the report from Vijayapura District Superintendent of Police Siddaramappa, DGP (Prisons) Satyanarayana Rao told reporters.
In the video footage aired by some TV channels, currency notes were seen showered on the dancer by a few people around.
The event was reportedly held before releasing 38 prisoners from jail for good conduct.
The dance show was held before the district in charge minister M B Patil and other dignitaries arrived at the function and presented release certificates to the convicts.
Rao said the Bengaluru police team would investigate the incident thoroughly to find out as to who arranged the item songs and for what purpose.
He said it should not have happened and instruction would be given to jail officials not commit such mistakes in future.
Rao said officials have been asked to keep a vigil on bad elements and illegal activities of prisoners.
He said jammers would be installed in the jail campus to stop misuse of mobiles by prisoners.
Rao came to the city soon after some TV channels aired video footage of the programme.
He said he had given instructions to Belagavi jail superintendent to inspect the Vijayapura jail and also asked SP to send report on the incident.
Image: A screecapture of the 'item song' being performed before the inmates. Photograph: ANI/Twitter