HAIFA, Israel, March 10 (Reuters) - An Israeli court on Wednesday began hearing a civil damages lawsuit filed by the parents of an American woman who was killed by an Israeli military bulldozer in the Gaza Strip seven years ago.

The case of Rachel Corrie, an activist who campaigned for Palestinian causes, has highlighted controversy over Israel's treatment of foreign protesters in Palestinian territory, several of whom have died in confrontations in the past decade.

Successive Israeli governments, with substantial public support, have rejected arguments that their troops were to blame. The Justice Ministry said on Wednesday Corrie's death was her fault alone. It accused her of a role in violence and of trying to block an operation against Palestinian armed groups.

Corrie's family is suing Israel for $324,000 in the case, being heard by a court in the northern port city of Haifa. They say they hope their lawsuit will spur both Israel and the US government to further investigate their daughter's death.

Craig Corrie, Rachel's father, told reporters at the court: We pursue justice through diplomatic means and hope for a US investigation, of course.

He said Ariel Sharon, Israel's prime minister in 2003, had promised then-US President George W. Bush a fair, credible and transparent investigation into our daughter's killing.

That hasn't happened yet, Corrie said.

US Vice President Joe Biden has been in Israel this week, the highest-ranking visit so far by the Obama administration, but has made no public mention of the case. Corrie's supporters say Biden took an interest in the case when he was a senator.

Witnesses said Corrie, 23, was crushed to death in March 2003 by an Israeli military bulldozer while protesting at the razing of Palestinian homes in the Gaza Strip town of Rafah -- buildings Israel said it destroyed to deny guerrillas cover.

The Israeli army has said that its investigation found the driver did not see Corrie and that the fatal blow came from a slab of concrete, not the bulldozer itself. Witnesses have said she wore a bright orange vest that made her plainly visible.

Lawyers for the government have said the Israeli state bears no blame because Corrie was in a war zone where soldiers were fighting Palestinian militants in the throes of a bloody uprising in which thousands died.

An Israeli official said one witness testified, and that the court would reconvene on Sunday.

Hussein Abu Hussein, the Corries' lawyer, told reporters witnesses in the case were making their voices heard for the first time on an official podium. A spokeswoman for the family declined a request to interview Hussein for further details.