Thousands of young people camped out overnight in the main square of Madrid to protest against high unemployment and the Spanish government's austerity measures.

The protests Saturday in Puerta del Sol plaza brought the largest crowd yet in almost a full week of protests.

The demonstration was deemed illegal, but by morning, the number of protesters had thinned enough to allow cleaners in and traffic to flow as the sun rose.

Police say 25,000 protesters defied the ban, cramming into the square and filling the streets nearby.

There was a moment of quiet at midnight as the ban went into effect. Then the crowd erupted in jeers, cheers and chanting.

All of this began as a spontaneous sit-in in the centre of the capital by young people who are frustrated by mass unemployment and what they say are inept politicians.

Youth unemployment in Spain is at 45 percent. Overall, the country has a jobless rate of 21.3 per cent, the highest in the eurozone.

Since last Sunday, hundreds of young Spaniards have camped out in the square nightly, and by day, the square has been the scene of animated debates.

Spain's electoral board ruled the camp should have been disbanded at midnight to allow for what is normally called a "day of reflection," when campaigning and political acts are banned the day before regional and local elections.

So far police have not intervened and the protests have grown larger by the day.

With files from The Associated Press