Protest leaders called it "the moment of truth" for the grassroots movement that has swollen since July from a cluster of student tent-squatters into a countrywide mobilization of Israel's middle class.

"An entire generation wants a future," read one banner as demonstrators flooded the streets of Tel Aviv, Jerusalem and cities throughout Israel, shouting "the people demand social justice."

Netanyahu has warned he would not be able to satisfy all the protesters' demands, ranging from tax cuts, to expansion of free education and bigger government housing budgets.

Organizers said over 450,000 people took part in the demonstrations. Police put the number at least 300,000.

Protests on that scale in Israel, with a population of 7.7 million, are usually held over issues of war and peace.

Though the turnout was lower than the ambitious one million some had hoped for, commentators said the movement had made its mark on Israel by catapulting the economy onto a political agenda long-dominated by security concerns and diplomacy.

Social media also played a role in the Israeli protests, inspired partly by the impact of Arab Spring demonstrations.

Since it began, the popular movement has upstaged a diplomatic face-off with the Palestinians for UN recognition of statehood and has posed the greatest challenge yet to Netanyahu, halfway into his term.