Protest violence on this scale is rare in Australia, but flare-ups have become more common during the pandemic.

Some of the protesters had identified themselves as part of anti-government and "Sovereign citizen" groups, observers said.

Prime Minister Scott Morrison condemned the violence, saying: "This is not how Australia works."

"I am disgusted and appalled by behaviour that would see Australians come and set fire to such a symbol of democracy in this country," he said.

Workers inside the heritage building were quickly evacuated once the fire broke out on Thursday.

The current residents of the building, the Museum of Australian Democracy, had on 20 December shut its doors after indigenous protesters held a "peaceful sit-in".

The museum said it recognised protesters' rights to a peaceful protest. It has not yet addressed Thursday's protest.

Indigenous campaigners have been holding demonstrations in the lead-up to the 50th anniversary of the establishment of the Aboriginal Tent Embassy on the former parliament's front lawns.

The tent embassy was a protest occupation site that launched national discussion about indigenous land rights. It has been a permanent fixture on the lawns outside Old Parliament House since 1992 but is not always occupied.

Australian Capital Territory (ACT) Police said activity had escalated at the site in recent weeks.

Australia's parliament moved to a new building a short distance away on Capital Hill in 1988, but the Old Parliament House has remained as a museum and national heritage site.

Government lawmakers condemned the attack on Thursday, with several describing it as an "attack on democracy".

"Setting fire to a building is not a lawful protest, it is a crime and a serious one," tweeted the deputy prime minister Barnaby Joyce.

His predecessor, and current MP, Michael McCormack said: "Old Parliament House is on fire with protesters screaming "Let it burn! Let it burn!" How disgraceful. An outrageous attack on our democracy, our history, our sovereignty. This modern penchant for tearing down our past serves no purpose."

ACT Police said they had launched an investigation into the cause of the fire.