Humberside Police said around 800 people took part in the demonstration outside the giant Lindsey Oil Refinery at North Killingholme, Lincs.
The actions of the workers could spark more protests around the country as the jobless total rises towards two million during the economic downturn and anger mounts against the Government.
Some protesters carried placards repeating Gordon Brown's slogan 'British jobs for British workers'.
Derek Simpson, joint leader of Unite, called for urgent meetings with the Government and employers to discuss the "exclusion" of UK workers from some of Britain's major engineering and construction projects.
"We have a growing problem in the engineering and construction industry where UK workers are being excluded from important projects. The Government must take urgent action to deal with this situation as tensions are reaching boiling point.
"The contractors working on large projects like the 2012 Olympics and the construction of new power stations, must give UK-based labour a fair chance to work on the projects.
"We have a number of examples of contractors refusing to even consider applications for work from qualified local labour, with years of experience. This is now becoming a national problem.
"The Government has poured billions of pounds into the economy in an attempt at preventing unemployment reaching the levels seen in the early eighties.
"This strategy depends on employers playing their part.
Workers at the refinery walked out in protest to 250 jobs being given to foreign workers instead of unemployed locals following the awarding of a specialist contract to an Italian firm.
They were joined by trade unionists and other supporters from around the country.
It was the second day of protests, and demonstrators vowed to continue their demonstrations over the weekend if necessary.
Unite union regional officer Bernard McAuley said: "They've come from all over the country. We reckon there were almost 1,000 people here today.
"We've also had huge numbers of messages of support from people who are incensed by this decision. It's a total mockery.
"There are men here whose fathers and uncles have worked at this refinery, built this refinery from scratch. It's outrageous."
Humberside police said the event passed off peacefully and the refinery's owner, Total, said operations were not affected at the site.
The refinery covers 500 acres and is the third largest in the UK, processing 10 million tonnes of crude per year - 200,000 barrels per day.
Total, which runs the site, said the contract for the construction of the new HDS-3 unit at the centre of the controversy was awarded to the Italian-based firm IREM after a tendering process which included British companies.
IREM has a permanent specialist skilled workforce which it employs directly.
In a statement, Total said:"We recognise the concerns of contractors but it is important to note that there will be no direct redundancies as a result of this contract being awarded to IREM.
"We have been a major local employer for 40 years and have always enjoyed a good relationship with our staff and contractors. We are disappointed they have taken this action and we hope the situation will be resolved as soon as possible and the contractors return to work."