Police clashed with protesters outside the Greek parliament on Wednesday, blanketing the centre of Athens in tear gas as they came under attack from firebombs during a massive demonstration against austerity.

An AFP reporter saw some 200 youths hurling themselves at a steel barricade erected outside the parliament building as the street protest of some 70,000 people converged on central Syntagma Square at the beginning of a two-day general strike.

A battle later broke out outside a row of luxury hotels on the square and a department store was vandalised as small groups of hooded and masked protesters broke away from the main demonstration.

A presidential guard sentry box was set on fire near the tomb of the Unknown Soldier, Greece's foremost military monument that stands next to parliament, before police moved in to clear the area.

Police were also attacked in the second city of Thessaloniki, where the government's regional headquarters was assaulted by a group of 100 protesters throwing firebombs.

A record turnout of more than 125,000 people according to police rallied around the country against a new austerity bill heading for a parliament vote on Thursday.

Union sources put the turnout at 200,000 people in Athens alone.

The attackers also pelted police with pieces of broken masonry and refuse littering the city's streets from a two-week strike by municipal garbage collectors, and smashed a police sentry box near the Greek finance ministry.

Striking taxi owners in another part of the protest who set fire to garbage bins were also sprayed with tear gas and retaliated by throwing bottles at police.

The bulk of demonstrations in Athens, Thessaloniki, Patras, Heraklion and other cities were mainly peaceful despite boiling anger against the new wave of cuts imposed on a country already slogging through nearly two years of belt-tightening.

"Today and tomorrow is the greatest general strike, the greatest mobilisation by the Greek people against the unfair, anti-social and ineffective measures brought by the government and its creditors," said Yiannis Panagopoulos, head of the main union GSEE that represents private sector staff.

Police in some areas added that participation was the highest in a decade.

Authorities in Athens had thrown a cordon of riot police buses and a steel fence in front of parliament and shut down two metro train stations in the area.

Four youths were arrested at the start of the demonstration, police said, with reports saying firebombs were found in their possession.

The government has repeatedly warned that failure to pass the legislation on Thursday ahead of an EU crisis summit on Sunday would prompt Greece's peers to block the release of loans and cause a payments freeze.

"If this bill is not approved, the government cannot represent the country at the summit, it cannot negotiate," Finance Minister Evangelos Venizelos warned parliament on Tuesday.

The government is expected to weather the vote, but a number of ruling party deputies have threatened to oppose an amendment to collective wage agreements.

Chief among them is former labour minister Louka Katseli, who faces dismissal from the ruling party group, a move that would lower the government's dwindling strength in the 300-seat chamber to 153 deputies.