London's Metropolitan Police said that officers are steadily working through the crowd, making further arrests.
Backers of Palestine Action have staged a series of protests across the UK since early July, when parliament outlawed the group and prohibited anyone from publicly showing support for it.
Politicians banned the group as a terrorist organisation after activists broke into a Royal Air Force base and vandalised two tanker aircraft.
Protesters gathered on Saturday afternoon in the square outside parliament, with dozens displaying signs reading: "I oppose genocide. I support Palestine Action".
That was enough for the police to step in.
"Within this crowd a significant number of people are displaying placards expressing support for Palestine Action, which is a proscribed group," the Metropolitan Police Service said on X.
"Officers have moved in and are making arrests."
Home Secretary Yvette Cooper moved to ban Palestine Action after activists broke into a British air force base in southern England on June 20 to protest British military support for Israel's war with Hamas.
The activists sprayed red paint into the engines of two tanker planes at the RAF Brize Norton base in Oxfordshire and caused further damage with crowbars.
Palestine Action had previously targeted Israeli defence contractors and other sites in Britain that they believe have links with the Israeli military.
Supporters of the group are challenging the ban in court, saying the government has gone too far in declaring Palestine Action a terrorist organisation.
"Once the meaning of terrorism is separated from campaigns of violence against a civilian population, and extended to include those causing economic damage or embarrassment to the rich, the powerful and the criminal, then the right to freedom of expression has no meaning and democracy is dead," the group Defend Our Juries said on its website.
The arrests outside parliament came amid what is expected to be a busy weekend of demonstrations in London as the war in Gaza and concerns about immigration spur protests and counter-protests across the United Kingdom.
While Prime Minister Keir Starmer has angered Israel with plans to recognise a Palestinian state later this year, many Palestinian supporters in Britain criticise the government for not doing enough to end the war in Gaza.
Pro-Palestinian protesters were gathering Saturday afternoon in central London for a march that is scheduled to end outside the gates of No. 10 Downing Street, the prime minister's official residence and offices.
On Sunday, several groups are scheduled to march through central London to demand the safe release of the Israeli hostages in Gaza.
