A police source estimated the crowds at 10,000, but an AFP photographer suggested the number could be far higher, forcing the closure of roads around Britain's parliament.
The march started outside the Israeli embassy in Kensington, in the west of the British capital, before passing Downing Street and coming to a halt outside the Houses of Parliament in Westminster.
Demonstrators held placards reading "Stop Israeli State Terror!", "Freedom for Palestine" and "Gaza - End the Siege."
They also chanted "Shame on you David Cameron" as they filed past the British prime minister's Downing Street office.
One speaker urged demonstrators to buy the song "Freedom for Palestine" by One World in the hope that it would enter the top singles chart and receive radio air play.
The event was organised by the Stop the War coalition and Occupy London, among others.
Organisers said that last week's similar protest, which passed off without any violence, attracted 100,000 people, although police put the figure at 15,000.
Both sides have agreed to a 12-hour "humanitarian" ceasefire in Gaza that started at 0500 GMT today.
New British Foreign Secretary Philip Hammond later insisted there was an "absolute humanitarian necessity" to extend the ceasefire.
The 19-day Israeli offensive on Hamas-ruled Gaza was launched in response to rockets fired by militants of the Islamist group into the Jewish state, and 37 Israeli soldiers have also died in the violence.
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