Minor scuffles broke out between anti-Islam and anti-racism protesters as hundreds of people and police congregated at a Sydney beach Saturday to mark the 10th anniversary of modern Australia's worst race riots.

Riot police and mounted units descended on Cronulla beach, a scenic spot in southern Sydney, as anti-Islam groups blocked by courts from organising a "memorial" rally in support of the December 11, 2005 incident held a "halal-free" barbecue.

The riot a decade ago -- which saw a drunken white mob of thousands attack Arab-Australians after two lifeguards at the beach were beaten up -- led to retaliatory attacks.

It shocked Australians and ignited a debate over whether the nation built on migrants was racist.

The anniversary has taken on fresh resonance amid growing concerns about homegrown extremism and Australians travelling to Iraq and Syria to support jihadist groups.

It also came just days before Sydney marks one year since two hostages were killed along with an Iranian gunman in a 17-hour cafe siege.

But authorities' fears about an outbreak of violence appeared to be largely quelled by the heavy presence of police, who outnumbered the 200 or so protesters.

The two groups were mostly kept apart, although there were several run-ins that were quickly broken up. Two men were arrested, New South Wales state police told AFP.

The president of far-right group Rise Up Australia, Daniel Nalliah, led the barbecue with chants of "Aussie, Aussie, Aussie, oi, oi, oi", a refrain usually heard at sporting events.

"If you come here, integrate in Australian life and culture... (or) shut up, pack up and get out," the Sri Lankan Christian migrant said to cheers from the crowd, some of whom had draped the national flag over their shoulders.

Holding banners such as "stand with Muslims against racism", the rival rally consisting of socialists, anarchists and other groups chanted "say it loud, say it clear, Muslims are welcome here".

"I lived here during the riot and for years I was ashamed to tell people I was from here," one protester -- Cronulla local Andrew, who did not want to give his last name -- told AFP.

"(Cronulla's) become a nice place, I don't want it to go back to what it was."

Another, Margaret, who did not give her last name, told AFP the anti-Islam rhetoric was "spreading hatred in our community when we should be spreading tolerance".