Mourners and protesters faced off in Sydney on Thursday at the funeral service for Australian Cardinal George Pell, a former top Vatican official who was acquitted in 2020 of sexual abuse accusations.

Australian police officials said they had dropped a court bid to block a protest after organisers agreed to change an initial demonstration route and gather in a road adjacent to St Mary's Cathedral, the funeral venue. Hundreds took part in the protest.

Pell's body has lain in state since he died at the age of 81 in a Rome hospital last month from heart complications after a hip surgery. 

Thousands attended the funeral, including former prime ministers Tony Abbott and John Howard, and federal opposition leader Peter Dutton. Hundreds more watched on big screens erected outside the cathedral. 

"He's the greatest Catholic Australia has ever produced, and one of our country's greatest sons," Abbott said during a eulogy.

"George Pell was the greatest man I've ever known."

In a park opposite the cathedral, groups of protesters, many from the LGBT community and some holding signs reading "Pell Burn In Hell", heard speeches against the cardinal and the Catholic Church.

"(We're here to) just show solidarity with the victims and the survivors of what's happened through the Catholic Church, but particularly George Pell," Layne Elbourne, a musician, told Reuters.   

Small numbers of mourners held up rosary beads in response to protesters' chants, though there were no signs of physical clashes between the two groups. 

Tensions had flared on Wednesday after some inside the church property were seen removing colourful ribbons tied by protesters along the fence of the cathedral, television footage showed.

The ribbons symbolised the pain inflicted on child sexual abuse victims, the protesters said.

Australia's High Court in 2020 quashed the convictions of Pell, a leading Catholic conservative, for sexually assaulting two choir boys in the 1990s, allowing him to walk free after 13 months in prison. Pell lived in Rome after the acquittal and had several meetings with Pope Francis.