BEIT HANOUN, Gaza Strip, Jan 11 (Reuters) - Palestinians in Gaza suspect that temporary clay houses they are being given to replace homes destroyed a year ago in the Israeli offensive are a sign that the United Nations is giving up on reconstruction.

The UN Relief and Works Agency (UNRWA) says it has been forced to use compressed earth blocks to build some housing because of a continuing Israeli ban on imports of cement and steel, which Israel says could be used for military purposes.

It's better than the tents. It's better than a house made of scrap metal, or sleeping in the open, said UNRWA media adviser Adnan Abu Hasna.

The United Nations has not given up on plans to replace destroyed concrete homes with new concrete homes, he insisted. The 120 units of unfired clay brick are funded by the United Arab Emirates as a temporary humanitarian solution, pending efforts to persuade Israel to ease its blockade so that some $5 billion pledged for the rebuilding of Gaza can be put to work.

Thousands of homes, offices and factories were destroyed by bombing, artillery and demolition in the Dec 27-Jan 18 war, in which more than 1,400 Palestinians and 13 Israelis were killed.

Making Gaza look backward with this sort of construction was not something pleasant for us, and we didn't want to. But we have been forced to, Abu Hasna said.

But the clay houses are weather-tight and durable, he added.

Such houses are being built in parts of Europe and in Malaysia, he said. It's no stigma to have a house like this.

For hundreds of families living in tents, and thousands camping in half-ruined houses, or sharing space with more fortunate relatives, they would make a welcome change.

ISRAEL NOT OFF HOOK

Israel says it could not begin to consider easing the Gaza blockade until security improves. Defence Minister Ehud Barak on Monday urged Gaza's Islamist rulers Hamas to rein in militants who continue to fire rockets and mortars into Israel.

On Sunday, three militants were killed in an Israeli air strike hours after Prime Minister Benjamin Netanyahu vowed a powerful response to any attacks from the enclave. About 300 rockets and mortars have exploded in Israel since last January's offensive, causing no casualties but rattling nerves.

Violence has risen along the frontier in the past month. Hamas official Sami Abu Zuhri said recent Palestinian attacks were in response to continued Israeli aggression.

Even if violence is checked, Israel will not relax its blockade significantly until Hamas releases Israeli soldier Gilad Shalit, whose proposed exchange for several hundred imprisoned Palestinians is the subject of lengthy negotiations.

Last month UNRWA handed over the first clay house to a family in the northern town of Beit Hanoun, whose two-storey home was destroyed a year ago. It stands out in a district turned to rubble, where tents take the place of buildings.

Nawal Al-Athamna said her two-room, clay-brick dwelling was an improvement after a year of living in tents, which were hot in summer and unbelievably miserable in winter. But it was no substitute for her old house where 20 people used to live.

We hope it is temporary. It must be temporary. It is absolutely no compensation for our lost home, she said. They (the United Nations) told us it was a replacement for the tent.

Osama Khail, a businessman who heads the Gaza building contractors' association, said UNRWA could use cement available on the Gaza market, which is smuggled via tunnels from Egypt. It's a surrender to the blockade, said Khail, who suspects the temporary housing could become permanent.

UNRWA spokesman Christopher Gunness said the suspicion is unfounded. Houses of compressed-earth bricks were a transition shelter solution for homeless families, he said.

This does not let Israel off the hook. (Additional reporting by Douglas Hamilton; editing by Douglas Hamilton and Dominic Evans)