The Occupy Wall Street movement made a surprise invasion of Zuccotti Park last night while the police focused on New Year's Eve celebrations elsewhere in New York.
Around 800 demonstators piled up metal barricades, hoisting American flags and banners while scuffles broke out between activists and police.
Shortly before midnight, 100 NYPD officers had surrounded the park in downtown Manhattan with reports of pepper spray being used.
One individual was arrested after an officer was stabbed in the hand with scissors. The policeman was taken to Bellevue Hospital and believed to be in a stable condition.
Zuccotti Park hasn't been occupied since police cleared it on November 15 in an early morning raid. The movement escalated at 8pm last night, when around 100 protesters entered the park and erected a small tent.
The New York Times reported: 'By about 10.30 pm, there were more than 300 people inside... One man carried a big white placard that read - New Years Revolution.'
Shortly before midnight, OWS protesters announced on Twitter that they had reclaimed the park and unfurled a huge hand-painted banner reading 'OCCUPY WALL STREET'.
They tweeted: 'Barricades being torn down at liberty [Zuccotti] park...Happy new years!!'
As the new year was welcomed around the city, demonstrators chanted: 'Whose year? Our year.'
On Occupy Wall Street's official website it stated: '2011 was an amazing awakening. Let's start 2012 off right! Come celebrate with thousands of other members of the 99%, at our park and in the streets, as we make our special New Years Revolution together.'
Police in riot gear entered the park at 1:30am where 150 people remained and arrested five demonstrators. Authorities closed the park until 9am this morning.
Activists had been camped out in Zuccotti Park since September 17 to protest against the unjust distribution of wealth in the U.S. and the excessive influence of big business on government.
The movement spread to other U.S. cities including Los Angeles and Portland as well as Australia, Britain, Germany, Italy, Spain, Ireland and Portugal.
Mayor Michael Bloomberg ordered the protest to be cleared in November because health and safety conditions had become 'intolerable' in the crowded plaza.
One million revellers filled Times Square to welcome in the new year last night amid tight security. More than 1,500 members of the NYPD were patrolling the massive 17-block party to ensure everyone’s safety. They also used more than 3,000 cameras and numerous check-points with bag inspections. Alcohol was banned from the event.