About 200 protesters marched with a police escort from the Aboriginal Tent Embassy outside the Old Parliament House in Canberra to the building on Capital Hill.

They sat on the forecourt outside the main doors and clapped and chanted before setting the flag on fire.

Police formed two lines to stop them from entering the building.

Aboriginal activist Wayne Coco Wharton organised the march, which was not an official event of the tent embassy, a spokesman told reporters.

Mr Wharton held a megaphone where he led the crowd through a chant “always was, always will be Aboriginal land.”

Another activist, Lionel Fogarty, took the megaphone as the Australian Flag was set alight.

He led the protesters in chanting: “Who owns the land – we do. Who stole the land – they did. What do we want – sovereignty.”

They called for black sovereignty and black justice.

Mr Fogarty stood on the last embers of the fire to put it out before protesters left Parliament House.

Four protesters, including an elderly woman in a wheelchair, made it inside the doors before being surrounded by security guards.

They left voluntarily and rejoined the crowd outside.

The march followed a protest on Thursday by tent embassy supporters that sparked a security scare at a Canberra restaurant.

Prime Minister Julia Gillard and Opposition Leader Tony Abbott were rushed away by security personnel from an Australia Day function held at a restaurant near the tent embassy.

Elizabeth Tamburro, a tourist from Bari in southern Italy, said the protesters had to follow the actions of other indigenous people around the world and that she understood their plight.

“They have to keep their identity,” she told AAP.

“But they have to live with the white people, like they do everywhere else.”