SOREQ, Israel, March 20 (Dan Williams/Reuters) - Israel is phasing out a civilian nuclear reactor to which it has admitted foreign inspectors while keeping a second reactor, widely believed to have produced atom bombs, off-limits, officials said on Tuesday.

The small facility at Soreq, which began operations in 1960 with a one-time stock of uranium fuel from the United States, will be replaced by 2017 or 2018 by a particle accelerator fulfilling many of the same research and medical functions.

A short drive from Tel Aviv, Soreq has served as a showcase for cooperation with international counter-proliferation efforts, though Israel remains outside a voluntary 1970 treaty that would require it forswear nuclear weapons and open up its larger, secretive reactor in the southern desert town of Dimona.

Israel has not signed the NPT (Non-Proliferation Treaty) and so, by definition, when Soreq is closed the inspections will no longer take place, said David Danieli, deputy director of the Israel Atomic Energy Commission, in an on-site briefing.

He said Israel would pursue continued and wide-ranging involvement with the U.N. nuclear watchdog agency and forums such as next week's South Korean-hosted Nuclear Security Summit.

Israel is reputed to have the Middle East's only atomic arsenal but neither confirms nor denies this under a strategic ambiguity policy to deter Arab and Iranian adversaries.

But it is keen to cast itself as a responsible nuclear player while world powers step up scrutiny of Iran's disputed nuclear energy program, which Western officials suspect is covertly designed to develop nuclear weapons. Iran denies this.

Along with Arab states, Iran has long tried to shift international censure towards Israel's nuclear conduct and will not attend the Seoul summit.

Danieli described Soreq's decommissioning as an outcome of its age and the fact that its highly enriched uranium (HEU) fuel is running out. As an NPT outsider, Israel is barred from importing new HEU, a primary ingredient in nuclear warheads.

Soreq director Hanoch Hirschfeld rued the HEU curbs, saying that if resupplied the reactor could potentially operate for another 30 years.

We could use more fuel, but if the decision is to make do with the alternative, then that is the way it will be, he said, referring to the particle accelerator being built in a boxy complex a stone's throw away from the reactor.

With dimensions akin to a small cathedral and a staff of 15, Soreq has provided services including medical isotopes and neutron radiography, an enhanced form of X-ray.

Its modest energy output makes comparing it with a traditional nuclear power reactor like likening a kettle to a steam engine, according to one Israeli official.

Husbanding HEU stocks, which U.N. inspectors tally twice a year to ensure none was diverted for military use, appears to have helped reduce Soreq operations to one or two days a week.

The reactor's schedule has been further trimmed by the occasional surge of fighting in Gaza, with Palestinians there launching rockets that can reach Tel Aviv's outskirts.

Whenever things start falling out of the sky, we close up, Hirschfeld said. (Editing by Mark Heinrich)