Rally organiser Debra Tranter wants the government to introduce Oscar's Law which calls on stricter regulations for dog breeders, heavier fines for cruelty to dogs and and regular RSPCA inspections of puppy farms.
"Codes of Practice for breeding establishments are absolutely pathetic," Ms Tranter said.
"They are not stringent enough, are not being enforced by local councils and are sentencing thousands of dogs to a life of imprisonment, most in absolutely deplorable conditions."
She said many people are unaware that they are supporting puppy farms when they buy a dog at pet stores, online or in newspapers.
Shadow Treasurer Kim Wells joined the protesters and said a coalition government would give the RSPCA the power to inspect breeding establishments.
"The Brumby government has had 11 years to fix the problem and now this industry is out of control," Mr Wells told reporters.
"If you are going to run a business you have to run it within the confines of the laws and at the moment they are not tough enough."
He said a coalition government would increase fines from $1000 to up to $30,000 and shut down illegal puppy farms.
"These actions will make sure those rogue traders are put out of business."
Miles Heffernan from the Lort Smith Lost Dogs Home says up to 11,000 dogs and 9000 cats are brought in to the animal shelter each year.
Around 28 per cent of the dogs are unable to be rehomed and are put down.
He said it was up to local councils to keep a check on breeders but many only acted after complaints rather than regular inspections of facilities and conditions.
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