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By Michael Shields

ZURICH (Reuters) - The Swiss government proposed on Friday allowing house arrest for people seen as posing a security threat even if they are not suspected of a specific crime.

The step is part of an anti-terrorism package the country is drawing up to plug what it sees as gaps in its legal system when it comes to people it calls "potential threats".

"At the moment police and justice officials have their hands tied in acting effectively against such people as long as no criminal investigation is under way," Justice Minister Simonetta Sommargua told a news conference.

She cited the example of three Iraqis convicted in 2016 of supporting banned jihadist group Islamic State who are now free after being released from prison even though authorities still view them as a security threat.

Under the proposals, which are open for comment before they go to parliament, the state could require such people to report regularly to authorities as some football hooligans now do, and restrict their movements and contacts.

House arrest would be the last resort and require a judge's approval.

Sommaruga said the government would carefully balance the need for security against protecting the rule of law.

"If we would put whole groups under blanket suspicion, for instance via sweeping surveillance of mosques or demanding preventative custody for as many as possible, we would only be creating red tape and spinning our wheels, which costs a lot and in the end brings nothing," she said.

Switzerland on Monday released a national plan to prevent violent extremism, including training teachers and sports coaches to recognise warning signs.

The Swiss so far have avoided the kind of attacks that have hit neighbouring Germany and France, but the Swiss Intelligence Service said last month it was tracking 550 people deemed a potential risk as part of its "jihad monitoring programme," up from 497 at the end of 2016.

Last month, Swiss and French police combined in a cross-border anti-terrorism swoop in which 10 people were arrested. Several high-profile criminal prosecutions have targeted people accused of supporting banned groups such al Qaeda or Islamic State.

Neutral Switzerland has not fought in the conflicts in the Middle East, but some fear domestic policies could put it in the crosshairs of militants. Voters in 2009 banned the construction of new minarets, and the Italian-speaking canton of Ticino banned facial coverings.

Bern is also tightening anti-terrorism laws, a push that could toughen sentences for people who support militancy and boost cooperation with foreign intelligence services.

(Reporting by Michael Shields; Editing by Alison Williams)

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