Prime Minister Benjamin Netanyahu's Likud-Beteinu alliance emerged from Israel''s election as the largest party in parliament, preliminary results released Wednesday showed.
With 99 per cent of the votes counted, the results also showed that the balance between the right wing-religious and centre-left wing blocks in parliament - crucial when building a coalition - was equally split, with both winning 60 seats.
Under Israel's proportional representation system, the final results expected Thursday could change, as more votes for one party could result in another losing a seat.
Central Elections Committee data showed Likud-Beteinu winning 31 seats, followed by the new centrist Yesh Atid party led by former journalist Yair Lapid appeared to win 19.
The centre-left Labour Party won 15 seats, a huge blow to party leader Shelly Yachimovich, who had hoped to head the second-largest party in parliament.
The ultra-nationalist Jewish Home party, whose surge in pre-election polls saw it labelled the "surprise" of the election, won only 11 seats, as did the religious Shas party.
Another party representing the ultra-Orthodox, United Torah Judaism, won seven seats, and the centrist The Movement headed by former foreign minister Tzipi Livni got only six seats.
The liberal Meretz party doubled its parliamentary representation to six seats, and three Arab parties - the United Arab List, Hadash and Balad - won five, four and three seats respectively.
The centrist Kadima, which won the highest number of seats in the previous election in 2009, suffered electoral meltdown after several defections including Livni. The party barely managed to scrape past the threshold of 2 per cent of the votes needed to enter parliament, with two seats.
Although coalition negotiations cannot formally begin until President Shimon Peres entrusts a candidate - most likely Netanyahu - with the task of forming a government, informal contacts were already underway Wednesday.
Netanyahu said Wednesday night he wanted to build as broad a coalition as possible, and his prospective partners were already setting terms.
"It would be a mistake to think that we're already locked into the coalition," said incoming Yesh Atid legislator Yaakov Peri. "What will guide us are our promises to the voters, nothing else."
Unnamed officials at Livni's party said that the issue of equal participation in miliary service would be one of the party's terms to joining the coalition.
Day-after newspaper headlines in Israel highlighted the apparent failure of Netanyahu to hold onto the 42 seats Likud-Beteinu held going into the election, and also played up Lapid's surprising showing.
All three Palestinian dailies in the West Bank also led with the election results, agreeing the results were a set back to Netanyahu, and using words like "flimsy victory"and "retreat."