About 200 protesters trapped Prime Minister Julia Gillard and Opposition Leader Tony Abbott in a Canberra restaurant before police arrived to clear a passage for the pair.
The protesters, from the nearby Aboriginal tent embassy, banged on the three glass sides of The Lobby restaurant chanting "shame" and "racist".
Ms Gillard and Mr Abbott had just spoken at a ceremony for the inaugural national emergency medals.
At least 50 police, including the riot squad, were called to the scene shortly after 2.30pm (AEDT).
The two leaders, protected by police and security officers, escaped out a side door after about 20 minutes.
The Prime Minister stumbled as she was rushed to an awaiting vehicle, lost a shoe in the chaos and was helped up by police who were confronted by the protesters.
There had been false reports that the Prime Minister had been tackled. Ms Gillard's office confirmed she slipped as she was leaving the building.
Protesters chased their car down the road, banging on its roof and bonnet. Police formed a cordon across the road to let the vehicle get away while eight indigenous women sat on the road facing them.
The embassy is celebrating a 40-year milestone with a three-day "Corroboree for Sovereignty" with thousands of indigenous Australians travelling to Canberra for the occasion.
Tensions boiled over on Thursday afternoon following comments Mr Abbott made in Sydney earlier in the day.
Mr Abbott said he understood why the tent embassy was set up "all those years ago".
"I think a lot has changed for the better since then," he told reporters.
"I think the indigenous people of Australia can be very proud of the respect in which they are held by every Australian.
"I think a lot has changed since then, and I think it probably is time to move on from that."
For many Aboriginal people Australia Day is considered Invasion Day.
In: World News
Tags: Protesters Gillard and Abbott protesters trapped Minister Julia Gillard and Opposition Leader Tony Abbott in a Canberra restaurant before police arrived to clear a passage for the pair. The protesters, from the nearby Aboriginal tent
Location: Canberra, Australian Capital Territory, Australia (load item map)
Marked as: approved
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