The footage shows anger growing among the crowd as police start pepper spraying people. Bottles start being thrown at the police officers shortly after.
Police officers arrived in the area just before 3pm after seeing an unauthorised beach party in a designated alcohol-free zone.
Two women, one a UK national and the other from Ireland, were arrested after allegedly hitting police officers with bottles. They have since been charged with assaulting police.
"My officers were on the receiving end of some alcohol-fuelled violence and it was dealt with swiftly in order to bring the matter under control," Superintendent Karen McCarthy told reporters in Randwick on Tuesday.
"The people at the party were intoxicated, they were obviously in a festive mood and the majority of people were compliant with police actions, however, there was a small, isolated incident."
The video posted on Facebook shows at least four women being pushed to the ground, including two who landed on the road, as officers doused others with pepper spray.
But Supt McCarthy insists the incident was handled appropriately.
"Police deployed appropriate tactics in order to deal with the alcohol-fuelled violence and bring the matter safely under control," she said. "The people were in contravention of the alcohol-free zone and we simply took swift action to move the people from the area and get them onto safe transport home."
Randwick City Council Mayor Lindsay Shurey praised the police response to the "drunken beach party".
"The police response shut down the party very quickly and helped prevent any serious accidents or major injuries amongst the highly intoxicated revellers," Ms Shurey said in a statement on Tuesday.
"I condemn the behaviour of those backpackers who attacked and assaulted police by throwing bottles - this is un-Australian."
The Sydney beach was not the only one to be targeted for celebrations, with an estimated 5000 people gathering at Melbourne's St Kilda foreshore on Christmas Day and leaving a huge amount of rubbish behind.
Overall four people were arrested in Sydney and Melbourne at the booze-fuelled Christmas Day celebrations.
Videos from the party in Sydney posted online show dozens of people in Santa hats drinking, singing and dancing to loud music.
One man wearing a panda head and carrying a boxed-wine bladder, or goon bag, holds up his middle finger as police officers approach the booing crowd.
The event was being held at an alcohol-free beach but some have questioned police tactics in breaking up the party.
Revellers being moved on by police at Little Bay.
Revellers being moved on by police at Little Bay.Source:Supplied
Two women aged 23 and 25 were charged with assaulting a police officer, while the younger was also charged with causing actual bodily harm. They are expected before Waverley Local Court on January 31.
One man who was at the party but didn't want to be named told AAP that details of the event were spread through Facebook.
Stephen Minshaw, who was injured, said police were hitting people with batons as they tried to leave the area.
"I don't get why the police needed to use force," he told the Seven Network. "We're backpackers, we're not going to ... fight back against them." He denied the party had become out of hand.
About 3000 partygoers were forced to leave the beach. Picture: David Newman/facebook
About 3000 partygoers were forced to leave the beach. Picture: David Newman/facebookSource:Supplied
Other social media users responded to the footage by labelling the police response as "unnecessarily violent", "ridiculous" and going "way too far". A police spokeswoman said she wasn't able to comment on the videos or police tactics.
Five council workers were needed to help clean up the mess scattered across the beach, streets and nearby reserves and filled up about 40 bags of rubbish.
The strong police response followed a huge party at Sydney's Coogee Beach last year that left the area trashed.
Randwick City Council was left with 15 tonnes of rubbish to clean and banned alcohol in the area for the rest of the summer as a result of the "disgraceful" events at Dunningham and Goldstein Reserves.
Ahead of this year's festivities, the council introduced tighter alcohol restrictions for Christmas and anyone who was caught risked a maximum fine of $2200, police said.
Meanwhile significant police resources were called in to disperse the crowd in Melbourne last night, with operations blocking off two lanes of traffic and causing disruption to local residents.
A 27-year-old man was taken to hospital after he was hit by a tram and a 27-year-old woman was hospitalised for intoxication. Two people were also arrested for being drunk in a public place and several people also suffered injuries from broken glass left scattered across the ground.
Victoria Police inspector Jason Kelly said while the overall behaviour of revellers was generally OK, some of the behaviour showed a lack of respect.
"What really disappointing Victoria Police is the level of intoxication that occurred here tonight, as evidenced by the amount of rubbish left behind," Inspector Kelly said.
"It's very disappointing, it's not acceptable."
He said no drinking was allowed on the foreshore after 8pm and a new council by-law prohibiting drinking on the streets and beach from today, would be enforced.
