Tens of thousands of protesters have joined a pro-democracy march in Hong Kong which is expected to be the biggest of its kind in recent memory.

The organisers of Hong Kong's annual 1 July demonstration expect 500,000 people to take part in a protest possibly even larger than the 2003 demonstration, when a record-breaking turnout caused Beijing to repeal a proposal for "anti-subversion" legislation. Police have said they will dispatch 4,000 officers to oversee the march.

Later, Hong Kong students are preparing an unauthorised overnight "occupation" of the territory's Central business district. Two student groups – Scholarism and the Hong Kong Federation of Students – plan to mobilise at least 1,000 students to flood Chater Road, a major thoroughfare in Central, from Tuesday night until early Wednesday morning.

Protesters in Hong Kong. Photograph: Dale De La Rey/AFP/Getty Images

"This will be a demonstration of a peaceful act of civil disobedience, to give Hong Kong residents faith in this kind of movement," said Alex Chow, 23, the general secretariat of the Hong Kong Federation of Students.

The annual demonstration's slogan this year is "Defending Hong Kong Authority: No fear of Beijing's threat of comprehensive control," according to its main organiser, the Civil Human Rights Front. Marchers will depart from Victoria park in Hong Kong's Causeway Bay area at about 3pm and end up several hours later at Chater Road.

The marchers' demands centre on achieving "true universal suffrage" for the region by 2017. On Sunday night, the pro-democracy movement Occupy Central With Love and Peace wrapped up an unofficial referendum in which nearly 800,000 people voted – more than 10% of Hong Kong's population. The vast majority requested that Hong Kong's 7.2 million residents be allowed to choose their own leader. China's state-run media has shown no indication that Beijing will consider such demands.

Protesters in Hong Kong. Photograph: Vincent Yu/AP

"Our other point is to warn both the central and the [Hong Kong] governments that civil disobedience will appear in Hong Kong," Chow said. "And if they do not accept the results of the referendum, the movement will keep upgrading."

On Tuesday morning, Hong Kong officials held a flag-raising ceremony to celebrate the 17th anniversary of the region's return to mainland control on 1 July 1997 after 156 years of British colonial rule. At a reception afterwards, the region's pro-Beijing chief executive, Leung Chun-ying, warned protesters against doing anything to damage the territory's "prosperity and stability".

Many Hong Kong residents fear that Beijing – which governs the region under the principle of "one country, two systems" – has been encroaching on their civil liberties, free press and independent judiciary.

A child holds up a banner during a pro-democracy rally in Hong Kong. Photograph: Dale De La Rey/AFP/Getty Images

On 10 June, the Communist party's state council issued an unprecedented white paper saying that Hong Kong only has "the power to run local affairs as authorised by the central leadership", a move that infuriated residents.

Down the road from the 8am flag-raising ceremony at Bauhinia Square, a small group of protesters from the League of Social Democrats, an outspoken opposition party, burned a copy of the white paper, chanting "we want public nomination," according to the South China Morning Post newspaper.