JERUSALEM, June 22 (Allyn Fisher-Ilan/Reuters) - A black four-digit figure atop an encampment near Prime Minister Benjamin Netanyahu's home flashes daily the number of days since Israeli soldier Gilad Shalit was seized by Palestinian militants on a raid from Gaza.

On Friday, the number will read 1825, marking the fifth anniversary of his capture. Shalit's parents will spend that day in a tent plastered with signs urging Israeli leaders to bring their son home.

We will sit here for as long as we have the strength, the soldier's father, Noam Shalit, said at the street corner camp they have called home for the past year in a public campaign to press Netanyahu to agree to prisoner swap with the militant Islamist group Hamas.

Shalit, grabbed by militants who tunnelled into an Israeli army border position on June 25, 2006 and took him into the Gaza Strip, has become a powerful symbol for Israelis, many of whom do compulsory military service and identify with his plight.

The fate of Palestinian prisoners held by Israel is also an emotional issue in the Gaza Strip, now controlled by Hamas, and the West Bank, where they are revered as heroes of the
Palestinian cause.

Netanyahu has said he was committed to seeking Shalit's release. But his rightist government balks at meeting Hamas' demands to free hundreds of prisoners, among them men convicted of lethal attacks, calling it too great a security risk.

Shalit, who holds dual Israeli and French citizenship, was 19 at the time his capture. The last sign of life received from the soldier was a videotape released by his captors in September 2009 showing Shalit, pale and thin, pleading for his life.

He has not had any visits from the International Commission of the Red Cross.

NO MILITARY OPTION

Suggesting that a military operation to try to free Shalit was impossible, retired general Gabi Ashkenazi said in May after he stepped down as Israeli military chief that Israel did not know where the soldier was being held in the Gaza Strip.

Activists in a campaign to win Shalit's release have voiced fears he could suffer the same fate as Ron Arad, an Israeli navigator downed over Lebanon 1986 and captured by  militants.

Israeli diplomatic and military efforts to free Arad failed and he is presumed to be dead, although in the absence of firm evidence, he is still listed as missing in action.

Calling for Gilad not to be forgotten, Shalit's brother disrupted Israel's main Independence Day ceremony last month,  running onto the parade ground to press the government to step up efforts to secure his freedom.

At the Jerusalem protest tent next to the security gate of Netanyahu's official residence, people stop to offer words of encouragement to Shalit's parents. Some buy tee-shirts emblazoned with the slogan Gilad is still alive.

A woman grips the hand of the soldier's mother Aviva, telling her: We feel your pain and hope he comes home, soon. The site has become a stopping-off point for many foreign leaders visiting Israel.

A senior Hamas official in Gaza, Salah al-Bardaweel, told Reuters little progress had been made of late in German efforts to clinch a trade. He said Hamas felt the list of prisoners it wants freed was minimal so there is no room for bargains.

About 5,500 Palestinians are in Israeli jails, including those convicted and those yet to face trial.

Israel has a history of carrying out uneven prisoner swaps. Nearly three years ago, it traded hundreds in its jails for the remains of two soldiers.

But Moshe Yaalon, a deputy prime minister, said on Israel Radio that bowing to Hamas's demands to release Palestinians responsible for deadly attacks would exact a heavy price that would ultimately bring about ... the murder of many Israelis.

Noam Shalit holds both Netanyahu and his predecessor, Ehud Olmert, who was prime minister in 2006, responsible for the failed efforts to free his son.

I'm the father of a soldier whose country sent him on a mission five years ago and hasn't succeeded in bringing him home yet. They say the price is too high yet the government doesn't do enough to pressure Hamas to bring it down, he said.

(Additional reporting by Nidal al-Mughrabi; Editing by Angus MacSwan)