But while two fellow inmates have been separated by authorities and questioned over Williams' bashing death on Monday, homicide detectives have not yet laid any charges.
Williams suffered serious head injuries after he was struck several times with the stem of an exercise bike, at about 12.50pm (AEST).
He was sitting at a table when he was hit from behind in an exercise facility in the Acacia Unit of the prison, southwest of Melbourne.
"One of the other inmates has walked up behind Carl and struck him to the head a number of times with a heavy instrument," Homicide Squad detective Bernie Edwards told reporters.
"We have viewed CCTV footage and it appears the stem of an exercise bike has been used during the assault."
Two inmates questioned
Late on Monday, his body was carried from the jail for a post-mortem examination to be performed at the Coroners' Court on Tuesday morning, police confirmed.
The homicide squad, Corrections Victoria and the Coroner are all investigating the death.
Corrections Minister Bob Cameron said Williams was housed in a unit with two other inmates, both of whom are being questioned by homicide detectives.
The three men were allowed to associate with each other for six hours a day, between 8am and 2pm, but were not always supervised.
Deputy Corrections Commissioner Rod Wise said there was one particular person who was of "special interest" to police.
"Mr Williams had spent 15 months in association with that particular prisoner and another prisoner had spent nine months with him and Mr Williams was happy with those arrangements."
Cardiac arrest after assault
A prison officer was about 10 metres away when the incident occurred, corrections officials said.
After the assault, Williams returned to his cell where he was found by prison staff, Deputy Chief Commissioner Sir Ken Jones said.
Paramedics said Williams went into cardiac arrest and could not be revived. He was pronounced dead at 1.47pm.
Williams was serving life imprisonment with a non-parole period of 35 years after pleading guilty to ordering the murders of three underworld rivals and the failed conspiracy to murder lawyer Mario Condello.
He pleaded guilty in 2007 of murdering underworld figures Jason Moran, Lewis Moran and Mark Mallia.
He was also convicted of the murder of drug dealer Michael Marshall and multiple drugs charges.
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