By Jeffrey Heller

JERUSALEM, May 3 (Reuters) - Israeli Prime Minister Ehud Olmert faced on Thursday a major challenge to his pledge to stay in power, a protest rally that organisers hope will draw at least 100,000 people demanding he resign over the Lebanon war.

A special parliamentary debate on an inquiry's scathing criticism of Olmert's decision to launch last year's costly conflict against Hezbollah guerrillas will precede the evening demonstration in Tel Aviv's Yitzhak Rabin Square.

But a vote of no-confidence in Olmert's government was not scheduled, a day after he fended off a public call to resign from Foreign Minister Tzipi Livni and won critical support from loyalists in their centrist Kadima party.

The battle was now moving to the street, the square where a mass demonstration in 1982 showed public dissatisfaction with Israel's Lebanon invasion that year.

"Our message will be that leaders who make mistakes that cost lives should put their keys on the table and go," Mickey Leibovitch, an organiser of the rally, told Israel Radio.

Some 1,200 people were killed in Lebanon, including about 900 civilians, while 117 Israeli troops died along with 41 civilians caught in the rocket strikes in northern Israel.

Organisers of the rally, who include a former general, reservist soldiers who fought in last year's 34-day conflict and parents of troops killed in the war, said they expected 100,000 to 150,000 people to attend.

"It's a legitimate, democratic demonstration. We cannot make light of any demonstration. A part of the population wants to demonstrate their frustration," Olmert adviser Tal Zilberstein told the radio.

But he said: "(The demonstration) doesn't mean that Olmert will now think ... he has to vacate his position and stop implementing the lessons from the Winograd committee."

The crisis broke on Monday when the government-appointed panel of two jurists, two former generals and a public policy expert accused Olmert of "a serious failure in exercising judgment, responsibility and prudence" in going to war.

The inquiry stopped short of demanding that he and Defence Minister Amir Peretz, who also was criticised in its interim findings, quit. The commission's full report, which could include resignation recommendations is expected in August.

Olmert accepted responsibility for "many mistakes" during the war in which Hezbollah rained 4,000 rockets on Israel and Israeli warplanes pounded southern Beirut, one of the militant group's strongholds.

But he said he would not resign, insisting he was the best man to put things right.

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