Labour leader Ed Miliband is among dozens of speakers addressing crowds at the biggest march in London.
Demonstrators want the coalition to end public service cuts and instead create policies they say can create growth.
However, the government says austerity measures are vital to cutting the deficit. Union leaders recently criticised Labour for supporting a public sector pay freeze.
Organiser Trades Union Congress (TUC), which says workers and campaigners from across the UK are involved with the demonstration, estimates that 100,000 people are taking part while the Met Police has not released an estimate.
Last year, more than 250,000 people had taken part in a London anti-cuts march and rally.
Thousands of activists poured down London's streets in a demonstration against reductions to public sector spending which officials are pushing through in order to rein in the Britain's debt, which stands at more than 1 trillion pounds.
Banners on display have included those reading "Cameron has butchered Britain", "no cuts" and "plebs on parade" - a reference to the row that led to the resignation of government chief whip Andrew Mitchell, the BBC reported.
Demonstrators were brought to London in more than 250 coaches.
London: Thousands of protesters in London, Glasgow and Belfast today held a loud but peaceful march against British government's austerity measures aimed at slashing the nation's debt.
First Published: Saturday, October 20, 2012, 21:15