A concrete and steel fence is being built across the centre of Sydney amid a massive security effort for a summit of Asia-Pacific leaders next week.
More than 5,000 police and troops will also be deployed as part of Australia's largest security operation ever.
The 5km (three-mile) barrier is intended to protect the 21 leaders attending the meeting from thousands of protesters expected at the summit.
Major landmarks such as Sydney's Opera House fall inside the protection zone.
The world leaders - including US President George W Bush and Russian President Vladimir Putin - will attend the Asia Pacific Economic Co-operation (Apec) meeting for talks on climate change, regional security and free trade.
'Rabble-proof fence'
Police say they expect protests to be violent and have warned demonstrators not to march near the venue.
"I'm looking forward to the beautiful city and to the extent I inconvenience [Sydney residents], I apologise"
But activists opposed to the Iraq war and global warming have insisted they want to make their point peacefully.
Australia's government has spent A$169m (£68m, $138m) on security for the event over six years, with media dubbing the barrier the "rabble-proof fence".
Fighter jets and police helicopters will patrol the skies above Sydney, while Australia's navy will deploy ships, divers, water police and special forces in Sydney Harbour.
Mr Bush has already apologised to Sydney residents for any inconvenience caused during the summit, which started on Saturday and will end on 8-9 September.
"I'm looking forward to the beautiful city and to the extent I inconvenience [Sydney residents], I apologise," Mr Bush said.
There is plenty to grumble about, says the BBC's Phil Mercer in Sydney, with commuters and tourists facing more than a week of disruption.
Parts of Sydney's rail network will be closed, along with many roads.
But residents have been given a sweetener, our correspondent says - next Friday has been declared a public holiday to coincide with the start of the meeting.
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