Victorian Premier Jacinta Allan said the chief commissioner had informed her a number of arrests had been made after a protest outside the Land Forces defence exhibition turned ugly on Wednesday.
"What we are seeing is a potentially dangerous and dynamic situation," she told reporters at state parliament.
She estimated around 3000 people had taken part in protests, down from the 25,000 that rally organisers had said would attend.
Dozens of police created a barricade outside the Melbourne Convention and Exhibition Centre to make way for attendees to enter, with anti-war protesters flanking either side.
Activists threw eggs and water and yelled "war pigs" or "get a real job" at the attendees as they walked along Yarra Promenade to enter the expo.
"Shame on you, how does it feel to murder babies," one group of protesters yelled in unison.
Police were pelted with horse droppings and tomatoes by some protesters, with one officer left with a bleeding face.
Victoria Police deploy pepper spray during an anti-war rally outside a weapons expo in Melbourne. (Joel Carrett/AAP PHOTOS)
Wheelie bins were set on fire and thrown towards police as the protest moved to the Spencer Street Bridge about 9.15am.
As tensions flared heavily armed police set off canisters of tear gas and used pepper spray foam to control the crowd, with a number of arrests reportedly made.
The gas was released on the bridge, triggering loud bangs, with dozens of protesters and attendees being treated after being hit by the sprays and gas.
Greens MP Gabrielle Di Vietri attended the protest and will make a speech to activists while parliament is sitting on Wednesday
She insisted the state government should have cancelled the "deadly weapons expo" on Tuesday.
But Ms Allan was critical of Ms Di Vietri, saying conflict overseas "should not be turned into an opportunity to drive conflict on the streets of Melbourne".
"You're not elected to run off and join political stunts for your own divisive political purposes," she told reporters on Wednesday.
Refuse set on fire as Victoria Police riot squad members confront anti-war protesters in Melbourne. (Joel Carrett/AAP PHOTOS)
Disrupt Land Forces spokeswoman Jasmine Duff said the protest was triggered by the government's stance on the conflict in the Middle East.
"We're protesting to stand up for all those who have been killed by the type of weapons on display at the convention," she said.Â
"Many of the weapons inside the convention centre are advertised as battle-tested. In the context of Israeli weapons firms, which are present, this means tested through killing civilians in Gaza."
Victoria Police expected Wednesday's protest to be its biggest operation in more than two decades as they deployed officers from around the state to the convention centre, with the cost in the order of $10 million to $15 million.
Anti-war protesters say their rally was triggered by the government's stance on the Gaza conflict. (Joel Carrett/AAP PHOTOS)
Police Minister Anthony Carbines thanked officers for their support as he issued a warning to protesters who may be turning violent.
"There's nothing but disrespect being shown from some protesters who want to behave like idiots and police will deal with you," he told reporters at state parliament.
Opposition police spokesman Brad Battin said he was concerned for the safety of officers.
"We've seen these kind of protests get out of hand when violence happens in the street," he told reporters.
The Land Forces International Land Defence Exposition, which will host senior international military, defence, government, scientific and industry delegations from around the world, runs from Wednesday to Friday.
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