A spokesman for Lisbon's police said about 100,000 people from all over the country took part in the demonstration - one of the biggest protests in recent years.


Some analysts say political damage from the spending cuts may be limited by the personal charisma of Jose Socrates, Portugal's prime minister.


Last month, his popularity was at its highest level since he took office two years ago, according to a recent poll by the Catholic University of Lisbon.


Portugal has managed to narrow its 2006 budget deficit to 4.6 per cent of gross domestic product, down from a deficit of 6 per cent the previous year.


Portugal's economy is expected to grow by 1.2 per cent in 2006 and 1.8 per cent in 2007, according to the Bank of Portugal.