Thousands of Australians defied coronavirus rules to protest the country's national day, held on the anniversary of British colonisation of the vast continent that its Indigenous population marks as “Invasion Day”.

Officially recognised as Australia Day, January 26 also sees annual rallies drawing attention to the injustices faced by Indigenous people and calling on the government to change the date of the national holiday.

Thousands of people gathered at a central Sydney park in defiance of police threats of fines and arrests for breaching a 500-person limit on public gatherings, though organisers called off a march through the city that usually follows, AFP reported.

Police said five people were arrested, including one who was charged with assaulting a police officer, but praised the crowds as largely peaceful. Authorities earlier refused to waive the cap on numbers, despite no new cases being detected in Australia's biggest city for more than a week.