A group of 100 Muslim radicals, including members of Muslims Against Crusades, shouted 'USA terrorists' and brandished anti-American placards.
One protester in Grosvenor Square said: 'You will always face suffering, you will always face humiliation, unless you withdraw your troops from Muslim lands.'
Anger: Members of the group Muslims Against Crusades burn the American flag during a protest outside the U.S. embassy in London
Detained: A masked member of Muslims Against Crusades is led away after the group's protest
Abdul Sallam, 41, who was waving a sign that read 'Keep The Silence', travelled down to London from his home in Glasgow to show the strength of his feelings.
He said: 'I'm a Muslim. What they're doing is bringing shame on all Muslims.This is not part of the teachings of Islam.
'Islam is all about peace, but what they want to do is hate other people.
Destructive: Protesters take pictures of the burning American flag during the demonstration
Sitting it out: Police prevent English Defence League supporters from confronting the Muslims Against Crusades protest outside the embassy
'If the moderate Muslims all came out and spoke out, that would defeat them.
'I am proud to be British. I love my country. All these people are doing is breaking Britain apart.'
Earlier, a group of English Defence League protesters were ordered to move on to accommodate the anti-American demonstration.
The 60-strong group briefly scuffled with police as they were forced away from their original location to a different part of Grosvenor Square.
Twenty people were arrested for breach of the peace as the group was dispersed towards Oxford Street.
And at least four more arrests were made as police escorted the Muslim group back towards the Central London Mosque in Regents Park.
Contempt: A fanatical protester spits at photographers as he is being arrested
Counter-protest: EDL members protest against the Islamist demonstration
One of the guests at the Grosvenor Square memorial service said the protesters should be stopped from standing just across the road from the embassy and using a loud megaphone.
The man, whose cousin died in the terror attacks, added: 'They shouldn't be allowed to do it. It's very disrespectful. It's too loud.'
He added: 'They can say what they want but not with the loudspeaker. They shouldn't obstruct the service.'