Two police officers have been injured and at least 20 protesters arrested as the Occupy Melbourne demonstration continues in the city's CBD.

There have been violent clashes between the police and protesters, who say they are demonstrating against corporate greed.

The protesters had been camped in City Square for almost a week, and when police moved in to try to remove them, chaos erupted.

Demonstrators took to the streets blocking traffic through some parts of the city.

Riot and mounted police dragged more than 100 protesters from City Square in chaotic scenes in front of thousands of onlookers.

Police used horses to barrage through the crowd and capsicum spray to subdue some activists.

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"I've been throwing water on my eyes, I've been rubbing onion in my eyes, I've even thrown milk on eyes to cool the sting, but my face is still on fire so I'm going to go off to the ambulance now," one protester said.

The scuffles spilled onto Swanston Street, where police ran horses through the crowd that blocked the intersection with Collins Street.

Assistant Commissioner Steve Fontana says the protest turned ugly because of demonstrators, not police.

"We're trying to use the minimum amount of force as possible," he said.

"We've asked the demonstrators or protesters to move on peacefully; they obviously haven't."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 49 seconds 49 s Watch raw footage submitted by a bystander showing mounting police dispersing protesters

The protesters refused to obey an eviction order served by the Melbourne City Council this morning.

Police tore down temporary barricades surrounding the protesters, who linked arms and would not move.

The activists have vowed to continue their protest.

Superintendent Rod Wilson says police are prepared to use force.

"If they are happy to be asked to leave and taken by the arm and escorted from site, then that is a minimal amount of force; if they resist, then obviously the police will up the ante," he said.

"We don't want any violence and we don't want any police officer to be injured."

Mr Wilson says people who resist police orders could face charges.

The protest has stopped trams on Swanston and Collins Streets.

Dozens of campaigners have been occupying City Square since last Saturday as part of a global campaign against corporate greed.

The sit-in was inspired by the Occupy Wall Street movement in New York.

Melbourne's Lord Mayor Robert Doyle told ABC Local Radio that the protesters had been there long enough.

"We have fenced it so that no extra people can get in," he said.

"We will ask police to clear City Square and then it will remain fenced for probably 48 hours while we clean up after them and fix any damage that they have caused."