Police said Bondi Beach and the suburb of Brighton-le-Sands near Sydney airport had been sealed off after people were arrested carrying petrol bombs.
About 2,000 police patrolled Sydney's beachside suburbs on Sunday, screening cars at dozens of roadblocks, seizing knives, clubs spiked with nails, steel pikes, knuckle-dusters and bottles of petrol.
Police said they had found five people north of Cronulla on Sunday with a 25-litre drum of petrol in their car. They also found two men with bottles of petrol on a Bondi bus.
Ken Moroney, the police commissioner for New South Wales, said that 60 arrests had been made since Friday. "We will continue this operation for as long as it takes," he said.
The southern beach of Cronulla, a mainly white beachside community, burst into rioting on 11 December when a large crowd stirred on by white supremacists, and fuelled with alcohol, turned on anyone of Middle East appearance.
"Bondi [beach] has never been this quiet. It's sad to see such an icon of Australia not being used because it's here for everyone"
Dave Byron, local resident
The crowd said they were defending their beach from ethnic Lebanese youths whom they blamed for a recent attack on beach life guards.
Lebanese youths retaliated over two nights, attacking people and vandalising cars in several suburbs.
Police issued an unprecedented warning on Friday for people to stay away from beaches in three cities - Sydney, Newcastle and Wollongong - saying they had received information that people were planning racial violence this weekend.
Police patrolled beaches on horseback all day on Sunday and set up checkpoints.
Dave Byron, a local who was taking part in i a surfing contest, said: "Bondi has never been this quiet. It's sad to see such an icon of Australia not being used because it's here for everyone."
White supremacists have added to the tension, though no one has been killed or reported seriously injured in clashes so far.
Race riots broke out between
caucasian and arab Australians
In central Sydney, almost 2,000 people held a "United Against Racism" rally. Some blamed Australian involvement in the US-led invasion of Iraq for a growing divide between whites and Muslims.
Sahar Dib, 44, said: "I have lived here for a long time but now I feel very terrified and scared to walk down the street."
She and thousands of other Lebanese fled to Australia in the 1970s when civil war broke out in Lebanon.