Four-hundred people in the suburban Dong Anh district surrounded 300 police officers, guards and officials at a ground-breaking ceremony for an 18-hole course on Monday, they said.
The demonstrators threw stones and petrol bombs at police in protest against the construction work. More than 20 policemen and 10 guards were injured, the sources said.
Police in Hanoi and in the district refused to comment.
According to state media reports, the golf course was planned by South Korea's Daewoo Corporation, which withdrew due to the regional financial crisis in the late 1990s.
When Thailand's Noble Vietnam company became the main investor in June 2003, its management could not agree to a deal with local people who are claiming compensation and jobs for young people.
Hanoi People's Committee has asked local authorities to find a solution that would suit both parties, the Tin Tuc daily said on Tuesday.
Demonstrations are not officially banned in communist Vietnam, but are strictly controlled and most of the time dispersed by security forces.
There have been numerous protests against local authorities - usually over corruption or land seizures - since the country began to open up its economy in the mid-80s.