The Royal Society of Chemistry (RSC) said the dummies represented the science researchers whose jobs would vanish because of the loss of funding.
The Department of Trade and Industry (DTI) is withdrawing £68m from the budgets of the Research Councils.
It says the money is needed to cover overspending elsewhere in the DTI.
This includes ongoing costs relating to the collapse of the Rover car group, and the unexpected increase in support needed to cover British Energy's nuclear liabilities.
"By hacking science so thoughtlessly, the government is lopping off parts of its own credibility"
"Chemical scientists are not dummies, so they will not accept this kind of action without speaking out loudly," RSC spokesman Brian Emsley told BBC News.
"We used the real dummies to speak for us all silently and very effectively."
Rhetorical mis-match
The action did not last long. The police forced the empty white coats and naked mannequins first to change location and then to move on.
"The police moved us on from College Green quickly since we were on government ground, but by then our point had been made well," Mr Emsley said.
The RSC claims about 1,000 British research jobs will be lost this year because of the DTI's decision.
It said the funding withdrawal did not match the government's rhetoric on the importance of science to the economy.
"By hacking science so thoughtlessly, the government is also lopping off parts of its own credibility," added Richard Pike, the RSC's chief executive.
The DTI says the loss in funding should be seen in a wider context.
It points out that the public science budget in Britain has more than doubled since 1997 to £3.4bn a year and, even with this claw-back, will continue to rise year on year.
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