State news agency MTI said there had been 10 arrests and that some protesters had been beaten as police sought to move them further from parliament, the site of official celebrations for state officials and more than 50 foreign dignitaries.
The anniversary has been marred by a month of protests sparked by Socialist Prime Minister Ferenc Gyurcsany's admission he had lied about the economy to win elections in April, exacerbating deep divisions in the country of 10 million people.
Even before that leaked speech, many on the right questioned whether the Socialists, the direct successors of the communists whose rule was cemented for 33 more years when Soviet troops put down the uprising, should be allowed to lead the celebrations.
Inside parliament, Gyurcsany said in 1956 Hungarians had no choice but to rebel, but that now the country, which joined the European Union in 2004, was a modern democratic state.
"Despite the often justified disappointment and discontent, the majority of Hungarians believe that parliamentary democracy is the most suited to express people's will and to create law and give a program to a free Hungary," he said.
But for the protesters, whose camp outside parliament was cleared on Monday ahead of the official celebrations, the words of a man who said "we lied in the morning, we lied in the evening" to win in April, were a betrayal of the ideals of 1956.
Some 2,600 Hungarians died battling the Red Army, more than 200 were executed for their role in the uprising and 200,000 fled the country.
Several former political prisoners and freedom fighters refused to shake Gyurcsany's hand at a state awards ceremony on Sunday.
"I spent eight and a half years in the Soviet Union and he (Gyurcsany) is persona non grata for me to shake hands with," said Karolyne Pinter, president of the gulag section of the National Association of Political Prisoners.
By mid-morning, around 2,000 people chanting "'56, '56" and "traitor" were marching through Budapest to Corvin Square, where thousands battled the Red Army 50 years ago.
"Dear guests, welcome to Gyurcsany's country where lies look like truth, sin looks like virtue ... Please help us to help him and his followers resign," read one protest banner.
The main right-of-center Fidesz opposition party, which wants Gyurcsany to quit and is boycotting his speeches in parliament, was due to hold a rally later in the center of Budapest.
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