Growing cultural conservatism is threatening the status of the Melbourne suburb of St Kilda as an artistic enclave, following a police raid on a gallery over child pornography fears, a local Labor MP has warned.

Several hundred people gathered on Saturday to protest at the Linden Centre for Contemporary Arts, which has been closed since police raided the gallery on 1 June.

Police removed several works from an exhibition by artist Paul Yore called Everything's Fucked which allegedly features images of sexual acts with children's faced superimposed.

Yore is yet to be charged over child pornography offences, which can carry a 10-year prison sentence. A police spokesman told Guardian Australia that a 25-year-old Footscray man had been interviewed and released. Police are still deciding whether he will be charged.

On Saturday, protesters demanded Linden re-open the gallery which, aside from Yore's piece, houses the Like Mike exhibition, a series of work by seven artists in tribute to the late Mike Brown, the only Australian artist to be successfully prosecuted for obscenity.

Martin Foley, state Labor arts spokesman and MP for Albert Park, attended the protest and told Guardian Australia that the controversy harmed St Kilda's "edgy" image for arts and dissent.

"For generations the St Kilda community has painted itself as haven for artistic dissent, to not just tolerate difference but to celebrate it," he said.

"To take a view that a conservative blanket goes over one element of that puts at risk the edginess that drives it forward.

"That's not to justify paedophilia and exploitation, but I'm not sure that Paul Yore's non-binary view of sexuality is a major risk to society. It's disappointing to see no pushback to the ridiculously small but rolling wave of conservative views on these issues."

Foley didn't blame the police for the raid but said that "fringe views" on the local City of Port Phillip council, which funds the Linden centre, were encouraging censorship.

"No-one is standing up for St Kilda's culture of dissent," he said. "But this is more than just St Kilda and Melbourne. It's about how we all view the arts.

"It's a continuation of what Manning Clark called the battle between the 'enlargers' and the 'straighteners' in Australian political culture.

"The community of St Kilda has long seen itself in the side of the enlargers. This incident highlights the continued slide to the straighteners in our culture."

The opposition to Yore's work has been spearheaded by a group of local figures. Minutes from a City of Port Phillip council meeting on 28 May show that Chris Spillane, a Liberal party candidate for the council, "stated that while he hasn't seen the exhibition himself, from what he has heard about the exhibition it is offensive and pornographic in nature".

The minutes said Spillane "suggested that the exhibition should be shut down or at the very least there should be more appropriate signage warning of the contents, age restrictions in place, and this section of the gallery should be cordoned off".

Spillane has previously claimed the council "wastes considerable sums of money" on projects that promote "socialism and multiculturalism".

He has been supported in his stance against the Linden centre by councilor Andrew Bond, who called Yore's exhibition "complete smut", and by resident Adrian Jackson.

Geoff Newton, co-curator of the Like Mike exhibition, told Guardian Australia that Linden artists were suffering over the unexplained decision to shut the gallery.

"The work is still in there," he said. "There is nothing or offensive about it. At no point were we told this would close.

"Everyone is incensed by this, they are outraged. We've been calling the director and board (of Linden) all week, but they say 'we can't comment, we can't tell you'.

"Galleries should be supporting the very stuff that assists them to remain interesting and vibrant."

Victoria police confirmed they had not issued a directive for the gallery to shut completely following the seizure of the artwork.

Sue Foley, chair of the Linden board and cousin of Labor MP Martin, did not respond to requests for comment.