The men can be seen with scrunched-up posters in their hands in the footage.

"The hostages aren't here, mate, they're not here, so why are we bringing it here," one of the men can be heard saying.

"This is my family," a woman from the larger group responds.

Police said they were investigating the incident, urging anyone with further information to contact Crime Stoppers or Waverley police.

It comes amid heightened tensions in Australia over the Gaza conflict.

Executive Council of Australian Jewry co-chief Alex Ryvchin said the vandalism went against Australian values including the right to peaceful, dignified displays.

"It is bad enough that anyone would object to a display that reveals the horrors of terrorism and the trauma of the Jewish world," he said on Thursday.

"It is completely unacceptable and contrary to Australian values to vandalise and attempt to destroy this display."

Many of the hostages continue to be held by Hamas, which controls the Gaza enclave and is considered a terrorist organisation by the Australian government.

As well as being home to Australia's most famous beach, Sydney's eastern suburbs are the centre of the city's large Jewish community.

Members of Melbourne's Jewish community were set to rally in the city on Thursday evening to call for a ceasefire in Gaza.

Israel has been bombarding and laying siege to the Palestinian territory in its bid to destroy Hamas and free the hostages.

However, it is under increasing international pressure to relent amid soaring civilian casualties and claims by United Nations officials that the siege amounts to a war crime.

Foreign Minister Penny Wong on Thursday called on Israel to ease up on the Gaza population.

"When friends like Australia urge Israel to exercise restraint and protect civilian lives, it is really critical that Israel listens," she said.

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