The government has accused the Public Affairs Committee of holding the meeting to call for the resignation of President Bingu wa Mutharika, whom the group accuses of mismanaging the economy and trampling on democratic freedoms.
But the group defied the ban by holding its meeting in the hall of a Catholic cathedral in Limbe, outside Blantyre.
The government has no authority to regulate meetings at churches, but scores of riot police surrounded the venue and searched all delegates as they entered.
More riot police patrolled the streets of the commercial hub Blantyre, while similar patrols were reported in the capital Lilongwe.
Malawian authorities last week accused the PAC of plotting “regime change” against Mutharika, whose second term in office has seen growing discontent with his rule. Political tensions erupted into rioting in July, when police shot 19 people dead.
Anglican bishop James Tengatenga, chairing the meeting, told the delegates in his opening address that “things have fallen apart economically and politically”.
He said the meeting was aimed at finding “effective solutions and plans of action to Malawi’s plight.”
Tengatenga said there was no “intention to stage a coup on the current regime”.
After the rioting last year, civic groups and government joined in UN-sponsored talks to address concerns about new laws to restrain the media, limit protests, and restrict lawsuits against the government.
The activists are also alarmed at chronic fuel and foreign currency shortages, blaming Mutharika for failing to manage the agriculture-driven economy.