Police have used capsicum spray on protesters outside a Liberal Party dinner to mark the 20th anniversary of the election of John Howard's government.
However, Prime Minister Malcolm Turnbull is suspected to have avoided the skirmish in Melbourne's Docklands by arriving by boat and entering the back of Shed 14 behind a police line.
About 150 people gathered outside the Central Pier function venue about 6pm on Friday to protest the federal government's changes to higher education and the treatment of asylum seekers.
Students, unionists and refugee activists held placards and chanted slogans such as "No ifs, no buts, no education cuts."
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The demonstrators scuffled with police, including about 50 uniformed officers, as well as five mounted police and some Australian Federal Police.
The protesters yelled "scum" and "shame" at guests and jostled them as they arrived at the venue and were ushered around the rear of the venue by security guards.
Some of the building's windows were broken, with officers using pepper spray on about 20 people, including an ABC cameraman.
Stephen Jolly, a Socialist councillor of the City of Yarra who spoke at the rally, said police overreacted to the protest.
"We've got a couple hundred uni students and the police are acting like it's al-Qaeda," he said.
Matt Munro, 46, from Hoppers Crossing, said he was sprayed in the eyes and mouth at close range after questioning an officer who had allegedly punched his friend.
"I was just trying to protect a friend and there was no need to spray me," he said.
He and other people were treated by ambulances at the scene.
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