An Israeli NGO which tracks alleged army abuses of Palestinians told a court Sunday that it could no longer function if the government forced it to name its anonymous informants.

"To demand lifting the confidentiality of testimonies would amount to simply demanding the end of Breaking The Silence," the group's lawyer Michael Sfard told the magistrates court on the first day of hearings on the state's demand that it hand over the names.

Proceedings are set to continue on July 18.

The NGO provides a platform for military veterans to describe what they say were disturbing aspects of their service in the 2014 war in the Gaza Strip and in operations in the Israeli-occupied West Bank.

The state attorney's office says that anonymous witnesses allow potential lies to spread and make it impossible to investigate alleged abuses.

"What is at stake is more than the future of Breaking The Silence," Sfard said in the packed courtroom in Petah Tikvah near Tel Aviv.

"Today it is Breaking The Silence which finds itself in court, tomorrow it will be bloggers, tomorrow it will be other members of the press and of course NGOs which defend human rights."

Founded in 2004 by army veterans, the organisation has come under political pressure from the government of Prime Minister Benjamin Netanyahu, one of the most rightwing in Israel's history.

It drew intensified fire last year when it published a book about the 2014 Gaza war, in which 2,251 Palestinians and 73 Israelis died, which included allegations by more than 60 officers and troops of abuse and excessive use of force.

Justice Minister Ayelet Shaked has said Breaking the Silence and other NGOs provided evidence to the United Nations which formed the basis of a 2014 UN inquiry into the Gaza war, which concluded Israel and Palestinian militants may have been guilty of war crimes.