The search and seizure operation was conducted in the morning in the Vellore women's prison.
"During a routine check by Vellore Prison Superintendent Rajalakshmi and her team a cell phone was found and seized. Further investigation is on," K.R. Shyamsundar, assistant director general of police and inspector general of prisons, told IANS.
Vellore women's prison authorities are tight-lipped on the issue.
The latest development could be a setback for Nalini, who has approached the Madras High Court against the Tamil Nadu government's decision to reject her appeal for release before her life term ends.
The state government based its decision to reject Nalini's appeal on the findings of the Prison Advisory Board headed by the Vellore district collector.
The board had listed eight counts not to free Nalini, including her reported refusal to apologise for Gandhi's murder in 1991.
A woman suicide bomber from the Liberation Tigers of Tamil Eelam (LTTE) detonated explosives strapped to herself while pretending to touch Gandhi's feet at a rally in Sriperambudoor on May 21, 1991.
Nalini was part of the team of conspirators that killed Gandhi for sending the Indian Army to Sri Lanka in 1987.
Originally, Nalini was convicted on 16 counts of murder and given death penalty.
On the intervention of Sonia Gandhi, the sentence was commuted to life imprisonment.
In September last year, Nalini filed a petition that she was entitled for release in 2005 itself as she had completed 14 years in jail.
After her arrest, Nalini had married LTTE activist known by his nom de guerre Murugan. He is also in prison for Gandhi's murder. Their daughter, who was born when Nalini was in prison, is grown up.
In March last year, Priyanka Vadra, daughter of Rajiv and Sonia Gandhi, visited Nalini in the prison. Nalini also cited that meeting while asking for her release.
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