Protesters from both sides spent more than an hour chanting words of opposition near the camp's entrance on the campus' south lawn on Thursday afternoon.
The groups were separated by a metre-wide moat and were joined by about 100 members of Victoria Police.
More than 50 people brandishing Israel flags and singing songs in Hebrew arrived about 2pm as dozens of students within the encampment came to its picket line.
One woman yelled "get Hamas out of our universities" while pro-Palestine activists shouted "from the river to the sea, Palestine will be free".
Police stand between members of the Jewish community and a Pro-Palestine encampment. (Joel Carrett/AAP PHOTOS)
Another woman attempted to grab the microphone of controversial media figure Avi Yemini before she was tossed to the ground next to the moat.
This triggered jeers and screams from both sides before the Israel supports were moved on by police at 3pm.
Earlier, several hundred pro-Israel supporters gathered at the campus' University Square, led by Jewish students who said they felt unsafe on campus.
Australasian Union of Jewish Students president Noah Loven said his group stood in opposition to the encampment, which has attracted more than 200 participants.
"We don't want to lean into what they want. So we're here to stand proud as your students and to stand together for peace," he said.
"In response to the troubling trend that has taken root in our academic institutions across Australia … Jewish students, my peers, have increasingly become targets of fear intimidation, and harassment."
One of the encampment organisers, Cooper Forsyth, said the protest was peaceful but they planned to stay until the university changed its relationship with Israel and weapons manufacturers.
"We've successfully and peacefully resisted the attempts to antagonise our encampment by other students at the uni," he told reporters.
"From the beginning of this movement and this camp, we have been absolutely clear that we reject all forms of hate and discrimination against people on the basis of their religion.
"We have been absolutely clear to reject any form of anti-Semitism in our camp or in our movement."
Pro-Israel supporters have planned a similar counter protest at the University of Sydney on Friday after students also created an encampment on its campus.
15°C