The protesters, estimated to number 250,000, marched on Martyrs' Square in Beirut's downtown escorted by 3,000 members of the security forces. The demonstrators were flying Lebanese flags and chanting anti-government slogans.
The protest was triggered by a government plan to modify the system of employment in the public administration, whereby civil servants would serve under five-year renewable contracts.
Under the current system, civil servants cannot be dismissed -- even if they have become redundant -- until retirement age.
Security forces imposed a cordon around the Serail, home to the prime minister's office, as the crowd shouted "down with the government" and "no for the government's destructive economic reform paper."
The government of Prime Minister Fouad Siniora had postponed discussion of the plan to avoid escalating tensions in the country which is already under stress over relations with Syria; the fate of pro-Syrian president Emile Lahoud whose extended mandate at Syria's behest is contested by many anti-Syria Lebanese groups; and the fate of Hezbollah's arms.
The government said the demonstration was unjustified, as the issue had been shelved for the moment, hinting that the demonstration was politically motivated.
One of the demonstrators said she was taking part in the protest to press for improving the deteriorating living conditions of the lower-income classes.