At least four people were arrested after rival rallies held by Reclaim Australia and the United Patriots Front and several groups against racism and Islamophobia attracted hundreds of people.
Victoria state Deputy Premier James Merlino said the clashes near state parliament, which included masked protesters who tried to break through a police line, were unpleasant.
"People don't like seeing ugly scenes like they're seeing today," he said.
"The message to all Victorians is that the spreading of hatred and the spreading of bigotry is not tolerated."
Police assistant commissioner Stephen Leane said while only a small number of protesters were intent on violence, the use of capsicum spray was justified.
"(Police) were at significant threat of having their lines over run and it was a tool we had to use at the time," he said.
"I think the message of the day from either side has been lost and I think they need to sit back and think about that."
"The clear message is that Melbournians aren't going to stand for the kind of far-right racist, sexist, homophobic attitudes... That we're prepared to say Melbourne is not the place for those kind of attitudes," she said.
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