Police are angry that a 2.5% pay rise was only backdated to 1 December for UK officers except for those in Scotland.
Prime Minister Gordon Brown said he would have liked to pay more but it was part of the "fight against inflation".
Police Federation chairman Jan Berry held "constructive" talks with the home secretary, but said trust between the two sides needed to be rebuilt.
Police say the rise is effectively a 1.9% annual increase - unlike that in Scotland, where it has been backdated to 1 September.
"We've got to trust the people that we're going to be negotiating with. And that trust is going to have to be rebuilt because it's been broken"
The Police Federation, which represents officers up to the rank of Chief Inspector, has applied for a judicial review of the decision by ministers.
Both the Met Police and the Police Federation estimated that 22,500 officers had joined the march.
Only a small number of uniformed officers had been deployed to man what was largely a quiet and orderly protest.
Officers from Scotland showed support for their colleagues by taking part, as did some from higher ranks, including superintendents.
POLICE PAY ROWEarnings lost if 2.5% rise not backdated to September 2007
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Some of the marchers visited Parliament to lobby their MPs.
A rally at Central Hall in Westminster, consisting of 3,500 officers, was followed by Ms Berry presenting a petition to Downing Street and meeting home secretary.
Ms Berry said of the meeting with Ms Smith: "She did listen and the talks were certainly more constructive than my last meeting with her, which I would describe as being pretty acrimonious."
She added: "We recognise that we need to move on at some stage but what we pointed out to the home secretary is that the 25,000 police officers who came to London today and those left behind who were doing their duty, there's still some unfinished business for how we've been treated.
"And for us to be able to enter into negotiations in the future, we've got to trust the people that we're going to be negotiating with. And that trust is going to have to be rebuilt because it's been broken."
She told MPs at a meeting in the House of Commons that the federation filed documents applying for a judicial review on 22 January.
Speaking at the Westminster rally, Liberal Democrat leader, Nick Clegg said it was "a disgrace" that the government had "let the officers down."
Shadow Home Secretary, David Davis followed Mr Clegg onto the stage and said he didn't understand why the government had reneged on the pay deal.
Federation members will be balloted next month on whether to campaign for the right to strike.
However, Andrew Haldenby, director of the think tank Reform, said police had been given above-inflation pay rises for the past 12 years without delivering a better service.
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"For things like anti-social behaviour where we do look to the police to actually make a difference, those areas of crime have not improved at all," he said.
The Police Minister, Tony McNulty, said that instead of marching, the officers should be talking to the government.
He added: "My message would be - as the home secretary has said - let's sit down now and look forward."
The Home Office said the home secretary was grateful for the vital and hard work carried out by police officers.
"However, we also have a responsibility to ensure pay settlements take into account affordability and consistency with government pay policy, including the maintenance of low inflation," a spokesman said.
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