* Boldest challenge yet to President Assad
* Arrests of schoolchildren helped fuel protests
* Deraa figures meet authorities, demand prisoners' release
* Assad shortens conscription period
(Adds meeting, demands)
By Suleiman al-Khalidi
DERAA, Syria, March 19 (Reuters) - Thousands of mourners called on Saturday for "revolution" at the funeral of protesters killed by Syrian security forces, in the boldest challenge to Syria's rulers since uprisings began sweeping the Arab world.
Security forces responded by firing tear gas to disperse crowds in Deraa, a region south of the capital where at least 10,000 people demonstrated on Saturday at the funeral of two protesters, among at least four who were killed on Friday.
"Revolution, revolution. Rise up Hauran," chanted the mourners in Deraa, administrative capital of the Hauran plateau, as they marched behind the simple wooden coffins of Wissam Ayyash and Mahmoud al-Jawabra.
"God, Syria, Freedom. Whoever kills his own people is a traitor," they said. Some of the mourners left a mosque and headed for the centre to protest.
The two were killed when security forces opened fire on Friday on civilians taking part in a peaceful protest demanding political freedoms and an end to corruption in Syria, which has been ruled under emergency laws by President Bashar al-Assad's Baath Party for nearly half a century.
A third man killed on Friday, Ayhem al-Hariri, was buried in a village near Deraa earlier on Saturday. A fourth protester, Adnan Akrad, died on Saturday from his wounds.
Deraa was less tense by late afternoon, with security forces using less force after a meeting at the main Omari mosque between the authorities and prominent figures in the city.
An activist who was at the meeting said officials were presented with a list of demands, most importantly for the release of political prisoners. Among them were 15 schoolchildren arrested in Deraa this month after writing slogans on walls, inspired by revolutions in Egypt and Tunisia that swept their autocratic leaders from power.
The list demands the dismantling of secret police headquarters in Deraa, dismissal of the governor, a public trial for those responsible for the killings, and scrapping of regulations requiring permission from the secret police to sell and buy property.
"If they do not respond the protests will only escalate," the activist told Reuters.
An official statement said the interior ministry had formed a committee to investigate the "regrettable events" in Deraa.
The city is home to thousands of displaced people from eastern Syria, where up to a million people have left their homes because of a water crisis over the past six years. Experts say state mismanagement of resources has worsened the crisis.
The Hauran region, once a bread basket, has also been affected by diminishing water levels, with yields falling by a quarter in Deraa last year.
ARRESTS OF CHILDREN FUEL RESENTMENT
Protests against Syria's ruling elite, inspired by revolts in the Arab world, have gathered momentum this week after a silent protest in Damascus by 150 people demanding the release of thousands of political prisoners.
At least one activist from Deraa, Diana al-Jawabra, took part in the protest. She was arrested on charges of weakening national morale, along with 32 other protesters, a lawyer said.
Jawabra, who is from a prominent tribe, was campaigning for the release of the 15 schoolchildren from her home city. Residents say the children's arrests deepened feelings of repression and helped fuel the protests in Deraa.
Assad said in a January interview Syria's leadership was "very closely linked to the beliefs of the people" and there was no mass discontent.
"The leadership have given a clear signal that they are not in any hurry to embark on fundamental political reform," said a diplomat in the Syrian capital.
In a move seen as an attempt to address the discontent, Assad issued a decree on Saturday shortening mandatory army conscription from 21 months to 18 months.
The long conscription period has generated discontent, especially among youth who resent state tactics to bring them into service, such as random ID checking, and the withholding of food aid from families whose members escape conscription. (Editing by Andrew Roche)
