THE Prime Minister and NSW Premier have condemned yesterday's violent Islamic protest that has horrified the nation, saying it represented 'the unacceptable face of multiculturalism' and was not 'the Australian way'.

Julia Gillard singled out the chilling image of a young child photographed by a woman as he held aloft a poster preaching death.

"I absolutely condemn the violence that we saw yesterday on the streets of Sydney," Ms Gillard said. "There is never any excuse for violent behaviour.

"I do not want to see in the hands of anyone, particularly children, offensive signs that call for the killing of others . This is not the Australian way."

Meanwhile Barry O'Farrell told Sky News: "What we saw yesterday was the unacceptable face of multiculturalism,"

"I'm just horrified by what I saw."

Federal Opposition Leader Tony Abbott said yesterday's ugliness did not fairly reflect the Islamic people of Australia.

Mr Abbott said newcomers to Australia were not expected to surrender their heritage but were expected to surrender their hatreds.

"I think that's the message that has got to go from every Australian to those people on the streets of Sydney yesterday.

"I don't believe we saw an acceptable face of Islam yesterday."

But outspoken Nationals senator Barnaby Joyce said political leaders must speak out to protect Australia "from what we might become years down the track".

"It's not xenophobic to ask what is in your national interest and what values we support and what actions we will condone," Senator Joyce told the Nationals' federal conference in Canberra.

"The riot that has happened in Sydney was supported by a certain world view that is not in our national interest. A response is demanded by politicians."

It came as the first of six men charged over yesterday's violence appeared in court today.

Father of three Ahmed Elomar, a 29-year-old champion boxer, was charged with affray and has been refused bail to appear again on Tuesday. The other defendants will face court next month.

Elomar displayed little emotion as he appeared in Parramatta Bail Court via video link wearing a T-shirt displaying the phrase "6th pillar".

Lawyer Greg Scragg argued that his client had not taken part in alleged acts of throwing bottles at police during the Sydney protest, adding that a shoulder injury sustained from a skiing accident in August had been exacerbated by his arrest.

"He was caught up in circumstances that got out of hand," Mr Scragg said.

"His arrest was not justified. His arrest was done in circumstances of over-policing.

"He was taken to the ground. While he was on the ground he was kneed in the back, he was sprayed with pepper spray."

However Magistrate Andrew George said Elomar had breached bail for driving offences and could not be trusted to obey bail conditions.

The nation was horrified by shockingly violent scenes yesterday as police were forced to use capsicum spray during a running battle with angry rioters in the Sydney CBD as the anti-America rally erupted into a series of violent clashes.

Triggered by a YouTube video mocking Islam and the prophet Mohammed, the city was rocked by a wild melee involving more than a 1000 protesters, with police being struck by water bottles, rocks and pieces of timber.

Six policemen were among a dozen people injured, with two officers requiring hospital treatment as the inner-city streets and Hyde Park turned into bloody battlegrounds.

Frontline police, including a dozen dog handlers, resorted to using capsicum spray as a wall of protesters tried to storm past them.

The Sydney riot follows a deadly wave of Islamic protests around the world which have left at least six people dead - including the horrific killings of US ambassador Chris Stevens and three US nationals in Libya on Tuesday.

The Sydney riot caused traffic chaos, forcing diversions as the placard-waving protesters - many of them women and children - gathered at Sydney's Town Hall around noon before moving to the US consulate in Martin Place.

Most disturbing was a shocking image of a young boy in Hyde Park holding a sign declaring: "Behead all those who insult the prophet". It went viral on social media.

O'Farrell: Riot the "unacceptable face of multiculturalism"

Other sign slogans included: "Our dead are in paradise, your dead are in hell".

The crowd then headed to Hyde Park chanting "Down, down USA".

It's there where the violence exploded. As police tried to disperse the crowd officers were attacked. They used capsicum spray to defend themselves. Police said cars were damaged and eight people were arrested.

At least one man was arrested in the late afternoon for attacking a police dog.

At least seven people were taken to hospital. Violence again broke out at 4.30pm when riot police clashed with the surging crowd as it attempted to move from Hyde Park towards Martin Place.

About 300 police in riot gear and on horseback chased the rally, numbering 100, east of Hyde Park and down William St, leaving traffic at a standstill.

Sections of roads, including Martin Place and Castlereagh, George and Market streets, were shut down while protesters moved through the city.

In one ugly incident, a man whipped up the protesters when he began yelling at the crowd, screaming: "Shame on you for using religion to advocate for murder." He was set upon by a group of men before police dragged him to safety.

Sydney remained on alert last night as police feared the violence could spill over again, despite pleading for peace and calm.

Police Minister Mike Gallacher said: "The violence we have seen is unacceptable.

"What we saw was a complete disrespect of our peaceful way of life.

"I praise the NSW Police Force for their swift and poised action. They are trained for situations like this and they did an excellent job in containing what was a very aggressive and violent crowd."

Protest organisers - who used social media to corral the protesters to Town Hall - said the demonstration was designed to be peaceful.

They stopped to pray and knelt on the ground in between making speeches and protest chants.

One organiser, Sam, told The Sunday Telegraph: "If someone attacked any religion, if Jesus was attacked tomorrow, we would be back here."

When asked whether the protest had been authorised through Sydney City Council, Sam confirmed that it had not because the group was unfamiliar with the rules surrounding staging demonstrations.

Martin Place and Castlereagh, George and Market streets, were shut down while protesters moved through the city.

Police Supt Mark Walton said: "In a very short amount of time we had a significant amount of police able to attend and deal with these people.

"In fact, certainly by 1pm we had at least 80 public order riot squad in operation supporting frontline police here and we were able to deal with and react to this crowd."

Another protester said: "We love [Muslim prophet] Mohammed more than ourselves and more than our wives."

Abdullah Sary said the gathering was part of a worldwide protest covering Asia, Africa and western Europe.

"In fact, certainly by 1pm we had at least 80 public order riot squad in operation supporting frontline police here and we were able to deal with and react to this crowd."

Abdullah Sary said the gathering was part of a worldwide protest covering Asia, Africa and western Europe.

"We are here to rally in protest about what they have said [on YouTube] about the prophet Mohammed," he said.

follows several held overseas since protestors first stormed the US consulate in Libya on Tuesday, where ambassador Chris Stevens was killed along with three staff members.

Photograph that will shock Sydneysiders

HE barely looks old enough to read but this little boy is holding a sign emblazoned with words of hatred.

"Behead all those who insult the prophet," said the sign, held by the child yesterday in Hyde Park as a woman photographed the scene and a baby slept in a stroller.

The photograph, taken in the midst of violent demonstrations that engulfed Sydney's central business district, was taken by journalist Joel Tozer and uploaded on Twitter at 3.45pm after the protest had moved from the streets to Hyde Park.

It went viral around the globe within minutes and sparked a series of tweets condemning it.

Kuranda Seyit from the Forum on Australia's Islamic Relations said: "Personally, I don't like to see it, it's disturbing. We have seen similar images of children carrying guns in the Middle East and it sends a negative message about Islam."

Of all the images captured in yesterday's riot, this picture will be remembered most. A woman, standing a few metres in front of the child, was spotted taking photographs of the child on her iPhone.

The youngster was not alone. Several other children, aged from five to 12, were also seen in the large crowd of protesters, holding a variety of placards with calls of hatred.

Other slogans scrawled on large pieces of cardboard and proudly held aloft included "Our dead are in paradise, your dead are in hell" and "Behead those who insult Islam".

There were peaceful scenes on the fringe of the protest, with photographs of men praying on grassed areas. Earlier in the day, women and children were told to leave for fear of trouble.

Many took the advice and were seen heading to train stations with their children - but quite a few chose to stay.