About 150 people gathered outside Work and Income New Zealand on St Andrew St at 1pm with placards and banners denouncing social development and employment minister Paula Bennett.
Police diverted traffic around the mob as people spilled on to the road, chanting "National scum" and calling for the minister to resign.
Many spoke of their struggle to find work, provide basic food and clothing for their children and pay rent.
Workers said the economic downturn and rising cost of core commodities meant the employed lived in poverty.
At 1.45pm protesters marched up St Andrew St and along Great King St and Moray Pl before turning down lower Stuart St to the Railway Station, where they gathered for a barbecue picnic.
The protest coincided with those throughout the country for the National Day of Action Against Welfare Reforms.
"These are grass roots protest actions, organised by and for the people likely to be affected by these reforms," Kay Brereton, of the Beneficiary Advocacy Federation of New Zealand, said ahead of the protests.
"People have chosen this a day to peacefully protest against reforms they see as punitive."
Protests were planned in Kaikohe, Auckland, Tauranga, Hamilton, Hastings, Wellington, Nelson, Christchurch, and Dunedin.
