Israel could ignite a third intifada if it continues to push its 1.2 million Arab citizens into a corner, claims Haneen Zoabi, the Arab member of the Knesset vilified for joining the Gaza aid flotilla.

Zoabi, who was branded a traitor for her participation in the Gaza convoy, warned that Israel was playing with fire. "We accepted a democratic, liberal state, we voted for the Knesset. But we are not just an internal issue – we are the litmus test of the whole problem. If Israel does not recognise this, conditions will deteriorate towards a third intifada."

But she rejected any suggestion that Israel's Arab citizens supported violence.

Zoabi rounded on a Hamas leader for suggesting her community could be used during civil unrest as a fifth column, conducting sabotage against the Israeli state. Mohammed Arman, a senior Hamas commander, had said, in a book smuggled out of his Israeli jail, that the role of Palestinian citizens of Israel would be to "harass the occupiers, disrupt their daily routine and undermine their confidence".

Zoabi said: "We don't accept that. I don't even like the word violent. Israel wants us to break the law and we won't. I did not break any laws by being on the Mavi Marmara" – the Turkish ship which was seized by Israeli forces as it attempted to break the siege of Gaza.

When she returned to Israel following the raid on the flotilla in which nine activists were killed, Zoabi, who represents the Arab political party Balad, faced death threats, and was jostled and sworn at in the Knesset chamber. She was also stripped of three parliamentary privileges. "I did not even break Knesset rules. The result is they are trying to change the law to de-legitimise me and my people."

Zoabi, who remains under armed protection, says that what happened to her was symptomatic of a broader campaign to undermine her community

The Association for Civil Rights in Israel says 14 bills, now working their way through the Israeli parliament, are antidemocratic. These range from demands that Arab citizens swear loyalty to Israel as a Jewish and democratic state, to a bill threatening imprisonment or financial sanctions for marking the event Nakba (an Arabic word describing Israel's war of independence) with protests, and a bill that criminalises starting up or developing boycotts against Israel.

The bills appear to be the latest sign of a campaign to force Palestinians who did not flee when the state of Israel was created in 1948 to chose between their identity and their citizenship.

Zoabi said a Palestinian man's conviction last week for "rape by deception" – after he had consensual sex with an Israeli woman who believed him to be a fellow Jew – was an example of "collective psychosis". She said: "Usually a regime wants to free its people from fear and hatred. This one trades on fear and paranoia."

When a policeman who shot a Palestinian car thief dead was this month given a three-year sentence there was such a public backlash the court took the unprecedented step of issuing a press release defending its decision.

Zoabi said that under this pressure her community, which makes up a fifth of Israel's population, was changing from one that saw itself as fighting for its civil rights to one that was part and parcel of the Palestinian struggle. "It took us 40 years for us to admit that we were even Palestinians. Another 15 years passed before we realised that the peace process started under Oslo had been a disaster. The Zionist project was to domesticate its Arab citizens as the hewers and drawers of water. But the carrot-and-stick approach failed, and now we see Israel is prepared to throw away its liberal side to control us. We were passive once and now we are becoming active about our national identity," Zoabi said.

In 1999 more than 90% of her community voted for the Israeli Labour party leader, Ehud Barak, who was to start talks with Yasser Arafat on a two-state plan.

Zoabi cites polls that say 89% would vote for a state "for all", the formula used by Balad for a bi-national secular state. Her party still officially favours a two-state plan. But Zoabi has expressed doubt that the Palestinian president, Mahmoud Abbas, could negotiate any state from Israel "bigger than a local authority". She said: "We did not immigrate to Israel. Israel immigrated to us. We are the indigenous people of a land from which we are being gradually expelled."

Born in Nazareth to an old and well-connected Palestinian family, Haneen Zoabi, aged 41, read philosophy and psychology at Haifa University and became the first Arab citizen to graduate from a media studies course. Her interest in politics was awakened by her desire to see equal rights for women. She became the first woman to be elected to the Knesset on an Arab party's list. Like her party Balad she rejects the idea of Israel as a Jewish state and says this is the only way to fight the demands of the far-right foreign minister Avigdor Lieberman that Israeli Arabs take loyalty oaths. Branded a traitor for being on the Turkish ship attacked by Israeli commandos, she said she received 300 letters of support from Israelis who backed her right to protest against the siege of Gaza.