About 5,000 people have gathered at Sydney's Cronulla Beach, where locals have vowed to fight Lebanese men they blame for violence in area.
Two men of middle eastern appearance were seen being pursued and attacked as they tried to flee the crowd.
Thousands of people waving Australian flags have gathered on the beach in Sydney's south in expectation of a fight.
The atmosphere had become more like a street party until one man of Middle Eastern appearance was chased into a hotel bistro. Within a minute the hotel was surrounded by several thousand people, who were screaming and chanting.
Police have been forced to stop traffic on Elouera Road, which runs along the foreshore, as the crowd, also chanting pro-Australian slogans, spilled on to the roadway.
Two men chased by the crowd were being protected by police who had moved in on Northies Hotel, on the foreshore, where at least one had sought refuge, it said.
Broken beer bottles scattered Elouera Road, with many in the crowd drinking heavily.
Mounted police and other units are maintaining a heavy presence at the beach today after two rival groups used text messages to urge attacks on each other.
Some of the text messages encouraged people to carry out vigilante style attacks, and some message had racial undertones.
One of the messages had urged "Aussies" to take revenge against "Lebs and wogs". Another urged locals to rally at point on the beach today to take retaliation against "middle eastern" gangs.
As the crowd moved along the beach and foreshore area today, one man on the back of a ute began to shout "No more Lebs" – a chant picked up by the group around him.
Others in the crowd, carrying Australian flags and dressed in Australian shirts, yelled "Aussie, Aussie, Aussie ... Oi, Oi, Oi".
North Cronulla Beach, in Sydney's south, was the scene of two violent incidents last week – an attack on two lifeguards on Sunday and a brawl later in the week in which youths turned on a media crew. Authorities have been calling for calm since those attacks, which are believed to have sparked the text calls for attacks between the two groups.
Premier Morris Iemma and Police Minister Carl Scully have warned people against taking the law into their own hands.
"Let there be no mistake – if anyone comes to this beach on the weekend with the intention of causing trouble, the police will respond with the full force of the law to maintain order," Mr Iemma said yesterday.