The Tripoli-based Judicial Police Authority said in a statement that the mass escape happened at Surman jail and that it had launched an investigation into the incident.
Police did not reveal the exact number of inmates who escaped from the jail, adding that it formed a committee to "identify them and take necessary legal action against them".
Salem Bahr, a local leader in the town of Zawiya, appealed via Turkey-based Libya al-Ahrar TV channel for an end to the fighting because "everyone who wins in this situation loses".
Bahr said the clashes killed three civilians and injured several others.
There was no immediate indication of who had taken part in the violence or why they were fighting.
Libya has been plagued by unrest since the overthrow of Muammar Gaddafi in 2011.
The clashes took place in Zawiya and Surman between rival armed groups.
Zawiya, 40km west of Tripoli, is home to Libya's largest functioning Azzawiya refinery, with a capacity of 120,000 barrels per day.
Azzawiya Oil Company put out a statement on Facebook urging workers "to take maximum precautions and completely avoid areas of clashes and the roads leading to them".
Unverified footage on the internet and local TV channels showed large plumes of black smoke billowing in the sky, and other clips contained heavy gunfire across Surman and Zawiya.
Surman mayor Mohamed Abu Snina described the humanitarian situation as very bad and said the clashes had caused serious damage, stressing that relative calm had returned to the city after the deployment of a neutral force.
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