(Corrects length of military service for women in paragraph 6)

JERUSALEM, Sept 24 (Reuters) - To many she is a traitor, a coward and a parasite. But 17-year-old Israeli "draft dodger" Saar Vardi says if more people thought like her, the Middle East would be a more peaceful place.

Vardi is part of a growing group of young Israelis who are refusing to sign up for mandatory military service, often in protest over the Jewish state's occupation of Palestinian territory or because of last year's unpopular war in Lebanon.

Army statistics show the number of young people who do not enlist for military service has crept up in recent years to more than 1 in 4 men in 2007 and more than 43 percent of women.

"People refer to me as a traitor and say that my country has given me so much and I'm not willing to give anything back, like a parasite," Vardi, a student, told Reuters.

"But I know what I believe ... If truly everyone saw things the way I see them then we wouldn't need an army."

Most Israeli men have to serve for three years in the army and are liable for reserve duty after that unless they can prove they are physically or psychologically unfit for battle, or come from an ultra-Orthodox background. Women must do two years.

Until recently, opting out of military service was largely taboo in a nation born out of war, and in constant conflict with its Arab neighbours. Groups of young soldiers clutching rifles are a common sight on the streets of Israel and for many, serving in the army goes to the core of national identity.

The trend to avoid the draft -- which has been joined by some entertainers -- has sparked heated media debate and government pledges to act.

"When he goes into battle a soldier should not have to feel that a portion of our society regards him as a sucker," Defence Minister Ehud Barak was reported as saying in July.

"It's time to go back to the days when service was a right and an honour and shirking was like wearing the mark of Cain."

"CANCER"

Ultra Orthodox Jews have been exempt from military service for years, and their ranks are growing. But more secular Israelis are also finding ways around joining up, sometimes by saying they are conscientious objectors or unfit.

Some say they are loath to fight for an occupying force and are willing to go to jail for their beliefs.

Others say they do not trust Ehud Olmert's government with their lives after a report said the prime minister acted impulsively in going to war against Lebanon last year.

And some young Israelis would simply rather focus on their education or career than on defending their country.

"There's the ongoing wars and the ongoing occupation," said Hagay Matar, who spent two years in prison for refusing the draft. "People are starting to feel they don't have to do it."

But several mayors have vowed not to allow entertainers who did not enlist to take part in Israel's 60th anniversary celebrations next year, and one suggested denying them jobs in municipal government.

Some commentators have lambasted those who shun military service, reminding them they face jail.

"Draft dodging is a cancer that eats away at the foundations of Israel as a society," said Eitan Haber, a columnist writing in Israel's most popular daily Yedioth Ahronoth. "They don't want to serve? They will get a mess kit and a prison uniform."

"WHAT'S ISRAEL DYING FOR?"

But those who resist military service have also found support. Columnist Yonatan Gefen asked in the Ma'ariv newspaper why Israel's young people would want to fight in an army "that doesn't know what it is dying for".

Israel should favour a leaner, professional military over conscription and focus on technology and intelligence instead of numbers, particularly since military might did not help it get rid of guerrillas in Lebanon, said another commentator.

"Modern wars are not won by masses of foot soldiers," wrote columnist Gabi Nitzam in Yedioth Ahronoth last month.

Israel is trying to make the army more attractive for young people by allowing promising sportsmen, musicians and even fashion models to do their military service away from the frontline while pursuing their careers.

The government is also planning to launch a civilian service programme, which would allow conscientious objectors, the physically unfit, ultra Orthodox Jews and Israeli Arabs -- who are exempt from the draft -- a chance to serve in other ways.

Reuven Gal, who headed a team that drew up recommendations to government for the new programme, said Israelis should have the option to shun the army as long as they did not shirk national duty entirely.

"We want to create a norm whereby a person who does not enlist goes to civilian service," Gal was quoted as saying. "We should not generalise and say that draft-dodgers should be strung up in the city square."