Main and Victoria roads were blocked as 500 residents lit bonfires. A group of youths threw stones at police, who fired teargas and rubber bullets at them.
Imizamo Yethu residents have accused the city and mayor Patricia de Lille of failing to re-house them after a fire ravaged the informal settlement in March, leaving 15 000 homeless. The city plans to redevelop the area before allowing residents to return.
A process to divide the area into 33 "super-blocks" for roads, fire-breaks and improved municipal services is under way.
Residents returned to the fire-ravaged area, citing poor living conditions at a temporary relocation village.
They expected a visit from deputy mayor Ian Nielsen on Saturday, but he never came.
Xanthea Limberg, mayoral committee member for informal settlements, said a representative had been sent.
“We received a request and I spoke with Anele Biti, who assured me he was at the protest to address the aggrieved residents,” said Limberg.
Bheki Hadebe, an ANC councillor, said residents are fed up with "empty promises" and "meeting after meeting which yield no results".
“We have a meeting scheduled for Monday with all the stakeholders and we hope to finally find a way forward,” said Hadebe.
City spokesperson Brett Herron said the decision to relocate Imizamo Yethu residents had been in compliance with a court order.
The order stipulated that the city had to provide displaced families with alternative accommodation and electricity.