Around 30,000 people gathered in Madrid's Cibeles Square for the rally, according to the central government's delegation in the Spanish capital. Organisers said some 700,000 people had taken part.
Lacking a parliamentary majority, Sanchez's government has been forced since its formation to negotiate with Basque and Catalan separatists to pass bills, which has angered many on the right.
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Conservatives accuse Sanchez of having eliminated the crime of sedition to assure the continued support of Catalan pro-independence party ERC in tight parliamentary votes.
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But the government argues sedition is an antiquated offence that needed to be replaced with one better aligned to European norms.