The riot squad and mounted police have pushed demonstrators from Sydney's Hyde Park after a protest swept through the CBD this afternoon.
The protests were triggered by a US film, Innocence of Muslims, portraying the prophet Muhammad as a womaniser and paedophile.
Protesters earlier refused to leave Hyde Park until police released a handful of arrested men.
Police said that, about 1pm today (local time), a group marched from Sydney Town Hall to Martin Place, where a confrontation occurred between protesters and police outside a building housing the US consulate.
Police used tear gas on the protesters.
Up to 500 people stormed through the city, working their way through Pitt Street before moving to Hyde Park amid a heavy police presence.
The crowd carried signs such as "Behead all those who insult the prophet" and "Our dead are in paradise, your dead are in hell".
Paramedics attended to several protesters suffering from the effects of tear gas.
Police arrested people in Hyde Park amid violent confrontations with demonstrators.
The protesters were pushed back as police dogs and capsicum spray were deployed.
Fairfax Media saw a number of arrests and seriously injured protesters.
One protester being taken away by ambulance spat at officers and chanted "Allahu Akbar".
More than 10 ambulance crews were at Hyde Park.
Speakers addressing the angry crowd called for calm.
"We are going to pray," a speaker said.
"The other important thing is our brothers want our arrested brothers out. There is not going to be any more violence.
"Our anger and emotion is purely for Allah and his message," he said.
Abdullah Sary, a speaker at the protest, said the protesters came in peace and were disappointed police used tear gas and the dog squad.
"The anger comes from the fact if you attack the prophet you are attacking our way of life," he told Fairfax Media.
"This was a non-violent protest but people don't like seeing their brothers attacks by dogs and ending up in hospital."
A speaker said to the protesters: "The person who made this video must be held responsible."
He received a loud cheer amid chants of "Allahu Akbar".
Late in the afternoon a lone man from outside the group shouted: "Shame on you for promoting murder in the name of religion."
The crowd swarmed at him attacking him and sparking a second wave of violent clashes with police.
Police rushed to the man's aide and dragged him out of the park under a rain of waterbottles, sticks and abuse.
Founder of the Islamic Friendship Association of Australia, Keysar Trad, condemned the violent protests, describing the marchers as a noisy minority.
"To be honest I am dumbfounded as to why people would deal with this issue in this particular way," he said.
"It's counterproductive and does nothing to uphold the prophet's honour as they claim. In fact it does the exact opposite."
The US embassy in Australia has refused to comment on whether any preparations were being made to beef up its security.
The Australian Federal Police provides protection for local embassies.
The Department of Foreign Affairs and Trading said it was reviewing its security arrangements for Australian embassies overseas.
- Sydney Morning Herald