A government audit released in August found that £90 million of the "pork barrel" fund - which allowed MPs to allocate government cash to their areas - had been released to questionable aid groups and ghost projects over three years.
The scandal centred on powerful businesswoman Janet Lim Napoles who allegedly collaborated with MPs in channeling some of the funds.
She has gone into hiding after she was charged with illegal detention of a whistleblower.
Local media reports of her lavish lifestyle angered many ordinary taxpayers in a country where nearly 28 per cent of the 97 million people live on a little over a dollar a day.
More than 100,000 people turned out to the protest in Rizal Park, including students, workers, priests and nuns.
Similar protests were held in a dozen other cities across the country and in New York and other places with large concentrations of Filipino expats.
Manila protesters carried placards saying "Senators, you should be ashamed of yourselves."
Others wore masks with a picture of a pig's face, or shirts calling for the fund to be abolished.
Manila Archbishop Cardinal Luis Antonio Tagle told the cheering crowd that all Filipinos should act in an honourable way.
"Let us also listen to the voice of God, especially in our conscience," he pleaded.
Actress Mae Paner who wore a pig's snout, a wig and a barrel around her body, said she was joining millions of Filipinos who "want to abolish the pork barrel system in our country."
Impeached chief justice Renato Corona, who was convicted last year by senators for failing to declare £1.5m in bank accounts, joined the crowd but left after being heckled by protesters.
Activists said that President Benigno Aquino's promise on Friday to reform the system was not enough and that all pork barrel funds must be abolished because they are prone to corruption.
But presidential spokesman Edwin Lacierda insisted that the money would now go to specific projects of government agencies.