The rally in Melbourne formed part of a national day of action for Gaza, with thousands of people also taking to the streets in Sydney and other cities.
A small group with Hezbollah flags - some holding what appeared to be framed photographs of the terror group's slain leader Hassan Nasrallah - joined the Melbourne event as speeches ended and people began to march.
Nasrallah was killed by an Israeli air strike on Friday, amid escalating tensions in the region.
Victoria Police said the display of terrorist symbols was a commonwealth offence.
"(We) support the right to protest peacefully and had a visible presence at the protest to ensure public safety," it said in a statement.
"Appropriate referrals will be made to Australian Federal Police as the lead agency concerning prohibited symbols."
Organisers of the rally told AAP the group was not affiliated with those running the demonstration.
The group was comfortably outnumbered by peaceful protesters showing solidarity with Lebanese and Palestinian communities.
A protester holds photograph of Hezbollah leader Hassan Nasrallah in Melbourne. (James Ross/AAP PHOTOS)
Hezbollah confirmed Nasrallah was killed by an Israeli strike in the Lebanese capital of Beirut on Friday, sharpening fears the conflict could widen into a regional war.
Federal Liberal frontbencher James Paterson said the presence of Hezbollah flags at the rally was "disturbing" given it is designated by Australia as a terrorist organisation, and called for police to enforce the law.
Rallies in solidarity with Gaza have been held weekly in Melbourne for much of the past year.
"You stand with Lebanon, you stand with Palestine," Omar Hassan, from Victorian Socialists, told fellow protesters.
"I want to say that it is a dark day for the people of the Middle East, and it's a dark day here in Melbourne ... but there are reasons to be cheerful and optimistic and hopeful."
Disturbing to see symbols of a listed terrorist organisation, Hezbollah, prominently displayed on the streets of Melbourne & Sydney today. This is a clear contravention of 80.2HA of the Commonwealth Criminal Code. It's time for police to enforce the law.— James Paterson (@SenPaterson) September 29, 2024
Some attendees stood under umbrellas with the colours of the Palestinian flag and the protest slogan "free Palestine from the river to the sea" around the edge.
Darebin protester Margaret, who did not wish for her full name to be used, said she had attended many of the protests and was glad to come out despite the rain.
"I would have never imagined we'd still be doing this, but we have to, that's all we can do," she said.
Foreign Minister Penny Wong on Sunday reiterated her call for Australians to flee Lebanon as soon as they can and said she was concerned about escalating violence.
Asked if she supported Israel's use of pagers to conduct deadly attacks, the foreign minister pointed to the cycle of violence taking place.
"The continued retribution ... will not bring peace and it will not bring security, which is why Australia and others, including the United States and the United Kingdom, have called for a ceasefire in Lebanon and diplomacy to try and resolve this," she told Sky News on Sunday.
"Because we have seen so many people, so many people die."
Protesters defied the rain in Melbourne to rally in support of Palestine and Lebanon. (James Ross/AAP PHOTOS)
Israel Prime Minister Benjamin Netanyahu was defiant in his address to the United Nations, rejecting calls for a ceasefire.
Opposition frontbencher Bridget McKenzie said the assassination was a step that "had to be done to show force" to prevent further escalation.
"What Penny Wong's calling for on the floor of the UN is absolutely playing domestic politics with a very, very serious situation," she told ABC's Insiders.
"She's trashing our decades long bipartisan approach to a negotiated two-state solution in the Middle East."
Hamas - designated by Australia as a terrorist group - attacked Israel on October 7, killing 1200 people and taking more than 200 hostages, according to Israeli authorities.
The attack sparked an Israeli offensive in the Gaza Strip that has killed almost 42,000 Palestinians, according to local health officials.
The conflict recently spread into Lebanon with the Israeli army responding after Hezbollah fired hundreds of missiles over the border.
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