A Palestinian flag was laid in front of the Cenotaph and "180,000 killed" spray-painted on the ground in front of the monument, photos and video footage showed.
The Cenotaph is the focus every year of of national events to commemorate Britain's war dead.
"Two women were quickly arrested on suspicion of criminal damage and are in custody," the Metropolitan Police said on X, adding that damage was caused to the road and not to the monument itself.
In a statement, the Youth Demand group said its supporters had taken action to "commemorate the thousands killed in Israel's genocidal assault on Gaza".
It said Youth Demand was calling for a two-way arms embargo on Israel and for the new UK government to halt all new oil and gas licences granted since 2021.
Supporters planned to disrupt the State Opening of Parliament by head of state King Charles III on Wednesday, it added.
Youth Demand last month staged a protest at the constituency home of former prime minister Rishi Sunak.
The war in Gaza was sparked by Hamas's surprise October 7 attack on southern Israel, which resulted in the deaths of 1,195 people, mostly civilians, according to an AFP tally based on Israeli figures.
The militants also seized 251 hostages, 116 of whom are still in Gaza including 42 the Israeli military says are dead.
Israel responded with a military offensive that has killed at least 38,584 people in Gaza, also mostly civilians, according to data provided by the Gaza health ministry.
