Police have arrested several protesters in central Sydney after a peaceful Invasion Day rally at The Domain, which more than 1000 people attended despite health orders limiting gatherings to 500.

The confrontation happened after officers warned the crowd in Hyde Park they were breaching public health orders designed to limit the spread of COVID-19.

Police on Monday warned people they risked being fined or arrested if the rally at The Domain got too big.

By mid-morning on Tuesday, the number of people gathered in the park had easily exceeded the 500-person cap for protests, which came into effect in response to the Avalon COVID-19 outbreak in December.

There was a large police presence in the area, and officers told the ABC they were trying to allow for separate groupings of up to 500 people.

Several speakers and musical performances were held as part of the peaceful event.

NSW Police were moving people on from the protest, which had dispersed by midday. Photo: ABC News

Around 11.00am, organisers of the rally said a planned march had been cancelled after they negotiated with police to have more 500 people at the park at once.

Despite that, a large number of people moved 500 metres from The Domain to Hyde Park, where some were handcuffed.

The event at The Domain, which thousands had registered their interest in attending via social media, went ahead despite some 11th-hour legal wrangling.

Organisers submitted a request to Mr Hazzard for an exemption to the 500-person cap for protests, which came into effect in response to the Avalon COVID-19 outbreak in December.

The protest’s organisers, being represented by the Aboriginal Legal Service (ALS), launched a late-night action on Monday in a bid to force the Health Minister to make a decision.

Invasion Day rally organisers defied public health orders and gathered in The Domain. Photo: ABC News/Jack Fisher

The hearing was scheduled to be held in the NSW Supreme Court at 9.00pm on Monday, but shortly before it began, Mr Hazzard formally refused the exemption.

“We urge all people who support our cause to still turn up,” the Fighting in Solidarity Towards Treaties, who helped organise the rally, said on the Facebook event page on Monday.

“We have done everything in our power to make this rally safe from both the pandemic and police.

“Stopping the violence that black lives and black land faces every day is too important to put on hold and we will be there tomorrow to fight for change.”

People streamed into the park around 9.00am on Tuesday, including a large group of “legal observers” in pink vests and began congregating to listen to the organisers give speeches.

“We are here today in solidarity with First Nations people. Holding celebrations on this day is very painful to them and we stand in solidarity with them,” said one person who attended the rally.

Protesters make a point at The Domain. Photo: ABC News/Jack Fisher

Sydneysiders defied public health orders to gather at The Domain to protest Australia Day. Photo: ABC News/Mridula Amin

Organisers said the protest was a “COVID safe event” with strict safety protocols, social distancing and a requirement for participants to register their attendance and wear a mask.

However, NSW Police Assistant Commissioner Mick Willing on Monday warned officers would be enforcing the public health orders.

“Do not come in and be part of that public gathering, find another way to express your views and opinions,” he said.

“We are all aware that these are sensitive issues and they are very important issues to a lot of people but we are still in the middle of a global pandemic and we’re asking people to abide by those health orders.”

Dozens of COVID marshals were on-site to help maintain social distancing and provide hand sanitiser for demonstrators. Photo: ABC News/Mridula Amin

-ABC