(Updates throughout)

By James Grubel and Rob Taylor

CANBERRA, April 24 (Reuters) - In the biggest pro-Beijing rally of the protest-marred Olympic torch relay, more than 10,000 Chinese Australians rallied in Canberra on Thursday, bringing a sea of red Chinese flags and drowning out Tibetan demonstrators.

Protests and tight security have followed the Olympic torch around the world over the past month, putting China's domestic and foreign polices under the spotlight ahead of the Games in August.

Beijing had hoped the torch's progress would be a symbol of unity in the run-up to the Beijing Games. However, it has turned into a public relations nightmare, forcing host countries to protect the torch with security measures usually afforded a state leader.

Anti-Chinese protests during the previous relay legs have sparked a wave of patriotism amongst Chinese at home and abroad, and on Thursday thousands of Chinese chanting "One China" packed the start and finish of the torch relay in the Australian capital.

Police made seven arrests, but for the most part the event was peaceful.

"This is a magnificent day for us today to show that Australia can have a peaceful rally. Watching overseas protests, I felt shamed that they can behave like that," Wellington Lee from the Chinese Association from the Victorian state told Reuters.

Chinese six-deep lined the 16-km (10-mile) relay route, and hundreds of cars drove around Canberra carrying Chinese flags.

"It was highly organised. Australians will feel a little bit uncomfortable by the fact that communist China came to town and just showed it can buy anything," free-Tibet supporter and Australian Greens Senator Bob Brown told Reuters.

Anti-China protests have largely focused on Beijing's crackdown against demonstrations by Tibetans in China earlier this year.

In Washington, Deputy U.S. Secretary of State John Negroponte called on China to stop vilifying the Dalai Lama and to instead start talks with the exiled Tibetan spiritual leader.

"Public vilification of the Dalai Lama will not help defuse the situation," Negroponte told a U.S. Senate hearing.

Beijing has accused the Dalai Lama of being behind March 14 riots in Lhasa and unrest that followed in other ethnic Tibetan areas, as part of a bid for Tibetan independence and to ruin the Olympics.

SCUFFLES

Unlike London, Paris or San Francisco, where torch bearers were jostled by anti-Beijing protesters as they ran, in Canberra a heavy police presence, steel barricades and the city's wide boulevards ensured runners were unobstructed. The Australian relay cost A$2 million.

Scuffles broke out between Tibetan protesters and China supporters, who included Australian Chinese and Chinese students in Australia, before the start of the relay and as a few Tibetan protesters tried to block the runners.

Two pro-Tibet women charged the torch convoy as it neared parliament house and were dragged away by police, as one yelled: "They're torturing my country."

Another man who sat down on the road in front of the convoy shouting "stop killing Tibet" was quickly dragged away by police.

Police were at times forced to escort Tibetan protesters through a sea of Chinese yelling "Liar, Liar, Liar" every time Tibetans called for human rights.

"We are a bit afraid but we really just hope that our voice can be heard in Beijing," said Tibetan Tenzin Dhargy.

Tibet protesters included Canadian singer K.D. Lang, a Buddhist who interrupted her Australian tour to travel to Canberra for the torch relay. "Tibet is a global heritage. It's something we want to protect, it's something that enriches the entire universe," she said.

The torch next heads to Nagano, Japan. (Additional reporting by James Grubel; Writing by Michael Perry; Editing by Jeremy Laurence) ("Countdown to Beijing Olympics" blog at http://blogs.reuters.com/china)

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