At least 16 people, including a British-born rabbi, have died and 38 were injured when two "terrorist" gunmen targeted a Jewish celebration at Bondi on Sunday.
Yisroel Lew, a rabbi at Chabad of Bloomsbury and Marylebone, spoke at the gathering organised by Stop the Hate UK on Sunday night.
"Just a small amount of light, a small good deed, can drive away a long darkness and that has always been the Jewish response, that remains our response," Rabbi Lew said.
"After hearing what happened this morning, the first thought was: how can we get more light, how can we bring more light into the world, how can we have more Hanukkah events?
"Go to Hanukkah events, don't be afraid and celebrate Hanukkah."
He told attendees that Eli Schlanger, a British-born rabbi who was among those killed in the attack, was a childhood friend of his.
"He really was a picture of kindness, of warmth, of service, of helping others," Rabbi Lew said.
He then lit a menorah to mark the first day of Hanukkah and attendees sang prayers.
Fiyaz Mughal, founder of the Muslims Against Antisemitism charity, told attendees he was "honoured" to stand with the Jewish community.
"I wanted to come and speak in solidarity with you because the threats against you continue to rise, and it's important that people like me make it clear that Islamist extremism, the hatred against you from small but entrenched parts of my communities, need challenging.
"The sense of intimidation you have to live through is appalling."
Attendees at the vigil cheered for a "hero" who was filmed tackling a gunman and grabbing his gun during the attack.
Mughal said: "There was a member of the Muslim community, Ahmed al Ahmed, who risked his life."
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