POLICE have fired tear gas and water cannon on demonstrators in the Chilean capital of Santiago and arrested 13 during the biggest protest in two months of action demanding educational reforms.

Organisers estimated a crowd of about 200,000 people participated in the demonstration, while local media gave an estimate of 100,000.

Protesters are targeted by police water cannon during demonstrations. Credit:AFP

Rioting broke out at the end of a sprawling demonstration on the streets of downtown Santiago, including a huge crowd waving flags and banners outside La Moneda, the presidential palace.

''This is historic. Since the return of democracy, we haven't seen anything this big,'' said Giorgio Jackson, a student leader.

The unrest came two weeks after about 70,000 people took to the streets calling for greater government investment in public education, which now totals 4.4 per cent of Chile's gross domestic product compared with the 7 per cent of GDP for developed countries recommended by the United Nations.

Students and teachers want the Chilean government to resume control of the public schools that educate 90 per cent of the country's 3.5 million students. Control of the public school system was ceded to municipalities during the 1973-90 military dictatorship of General Augusto Pinochet.

AAP