Ugly scenes have erupted between rival protesters at an event to condemn the construction of a mosque in Bendigo.

An Australian flag was burnt at the end of the protest.

About 300 people opposed to the mosque broke through police barricades and started punching anti-racism protesters on the steps of the Bendigo Town Hall on Saturday afternoon.

Mounted police intervened and were able to restore order after spraying the crowd with capsicum spray.

United Patriots Front spokesman Blair Cottrell, who was affected by the capsicum spray, said residents do not want the mosque.

Anti-racism leader Ezekiel Ox denounced the presence of the police, labelling them "genocidal maniacs". Greater Bendigo mayor Peter Cox said it was disappointing that people from outside Bendigo felt the need to visit the city and cause trouble.

"It certainly doesn't put Bendigo in the best situation," Cr Cox told AAP.

"We are a welcoming, giving and thoughtful city."

He said the police did a great job of keeping the groups separated.

Several roads in central Bendigo were closed since 6pm on Friday, with further blockades around Hargreaves Mall on Saturday.

Victoria Police spokeswoman Clair White said there were no arrests made and the capsicum spray was used to break up minor scuffles.

The local council gave the green light for the opening of the regional city's first mosque in mid-2014, a decision later upheld by the Victorian Civil and Administrative Tribunal.

But opponents claim there is no need for the mosque, which will include two prayer rooms, a shop and a community sports hall.

They argue it will cause traffic and social issues including the "Islamification of Bendigo" and a drop in house prices.

One comment on the "stop the mosque in Bendigo" Facebook site suggested it could lead to the poster not being able to cook bacon.

The rally has ended but a strong police presence remains in the town.