Around 20 members of the far-right anti-Muslim group chanted and handed out leaflets as they walked towards Dudley Street this lunchtime before clashing with dozens of anti-fascist protesters.
Several of the Britain First members were carrying white crosses - an action later criticised as 'a kind of blasphemy' by a senior member of the Church of England
The Rt Revd Clive Gregory, Bishop of Wolverhampton, condemned the group's presence in the city, saying: "Britain First's use of the cross and claim to support Christianity is actually a kind of blasphemy.
"Jesus' way is always the path of peace and reconciliation, of self-sacrifice and costly love, and in our contemporary multicultural society that means particularly in our relationships with our neighbours of other faiths including Muslims."
A key Britain First policy is a complete ban of Islam in the UK - including forbidding the Koran, the operation of mosques, face coverings and public preachings.
Revd Ray Gaston, the bishop's adviser on inter-faith relations, added: "The Church believes that what Britain First stand for is a denial of the Christian gospel.
"We value good relations with our Muslim brothers and sisters and recognise that our lives are enriched by them."
Under Britain First, anyone found to be promoting Islamic ideology would be locked up or deported, sexual offenders would be castrated and chain-gangs would be used for major public works.
Executions would also be re-introduced for terrorists, paedophiles and murderers.
Wolverhampton council leader Roger Lawrence called today's demo 'disgraceful', but Britain First organisers said the event had been a success and claimed to have distributed 2,000 leaflets.
The group's deputy leader Jayda Fransen said: "The West Midlands is a stronghold for us and we have recruited a few more activists today, it was a good day.
"For the first part, we met with opposition from left-wing and Muslim groups who hurled abuse and missiles at us but a lot of people saw our live feed and rushed in to give us their support."
Nick Kelleher, secretary of Wolverhampton, Bilston & District Trades Union Council, was among the counter-protesters along with members of United Against Fascism and Socialist Worker.
Mr Kelleher said: "These people are not from Wolverhampton. They are a nasty, violent group and they are not welcome here.
"This is not who we are in Wolverhampton. We are a diverse community of all creeds and colours. It 's not a backward place like years ago."
Jenny Ashcroft, 65, added: "This is a dangerous world we live in and we've got to oppose fascism like this every time it rears its head."
Around 50 police officers were needed to keep the opposing groups apart near the Wulfrun and Mander Centres, with Dudley Street closed off during the height of tensions - reducing trade to nearby shops on what was a sunny Saturday lunchtime.
One man from Manchester was arrested and charged with a public order offence.
Anthony Walker, aged 50 and from Gerald Road, Salford, was charged with using threatening or abuse words or behaviour with intent to cause fear or provoke unlawful violence and bailed to appear at Walsall Magistrates Court on August 25.