Union members carrying flags and banners gathered at Trades Hall to vent their anger about what they say are savage cuts.
Then they marched through the CBD to the Victorian Parliament buildings where they were met by dozens of mounted and uniformed police officers.
Cuts to government benefits and dramatic changes to higher education and health funding were announced in the budget last month.
Greens MP Adam Bandt said workers had a right to be angry.
"Protests like this are going to continue until this budget is off the table, and until this Government is out of office," he said.
The protest was organised by Trades Hall Council, with involvement from the Construction, Forestry, Mining and Energy Union (CFMEU), United Voice and other high-profile unions.
I think it's unjust and it needs to change and that's why we're here today.
Firefighter Steve Mundy
Firefighter Steve Mundy, who took part in the protest, said the Federal Government was not doing the right thing by the Australian people.
"I think the cuts to working class Australians are unfair and I think it's unjust and it needs to change and that's why we're here today," he said.
Felice Jacka maintained the Federal Government did not have a mandate.
"I feel that this Government got in by lying, blatant bare-faced lying," she said. "They said one thing and they've done something else."
Anthony Stafford said the budget cuts were not fair.
"The proposals that have been put forward by the Abbott Government go against everything that Australians stand for," he said.
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