The city center of Melbourne, which is the headquarters of Australia's trade union movement, was brought to a halt by the protest marking three months since the federal parliament passed the controversial laws.
The new measures allow bosses to change the conditions on which staff are employed and reduce legal restrictions on bosses who fire staff.
Kim Beazley, who leads the union-backed opposition Labor Party, vowed to repeal the laws if he becomes prime minister in elections next year. He estimated the crowd at about 150,000 people.
But authorities estimated the number at 80,000, Victoria state police spokeswoman Karla Dennis said. Police estimates of protester numbers in Australia tend to be conservative, the AP reports.
The rally in Melbourne, Australia's second largest city after Sydney, was the largest in a day of protest action across the nation.
In Sydney, unofficial police and union estimates put crowd numbers at almost 40,000, Australian Associated Press reported. The New South Wales state media office did not release a figure.
In Brisbane, Australia's third largest city, 10,000-12,000 protesters gathered, Queensland state police spokeswoman Jacqui McClure said.
The government lawmaker responsible for the reforms, Workplace Relations Minister Kevin Andrews, said the protests across the nation were the product of a fear campaign run by militant unions.