Prime Minister Benjamin Netanyahu's right-wing Likud Party haswon a surprise victory in Israel's election.
Exit polls had forecast a dead heat but with almost all votes counted, results give Likud a clear lead over its main rival, the centre-left Zionist Union.
The outcome gives Mr Netanyahu a strong chance of forming a right-wing coalition government.
It puts the incumbent on course to clinch a fourth term and become Israel's longest-serving prime minster.
The latest tally gives Likud 30 seats in the 120-seat parliament, the Knesset, with Zionist Union on 24 seats.
In a speech to jubilant supporters in Tel Aviv after Tuesday's polls closed, Mr Netanyahu described the vote as a "great victory" for Likud, which had trailed the Zionist Union in opinion polls in the run-up to the election.
Mr Netanyahu "plans to immediately begin forming a government in order to complete the task within two to three weeks," a statement from Likud said.
It said he had already spoken to parties he saw as possible coalition partners, including right-wing and ultra-Orthodox parties and centrist Kulanu, which won 10 seats.
Zionist Union leader Yitzhak Herzog called Mr Netanyahu early on Wednesday to congratulate him on the result and wished him "good luck".
"Nothing has changed, we will keep fighting for a just society," he was quoted as saying by Israeli newspaper Haaretz.
European Union foreign policy chief Federica Mogherini congratulated Mr Netanyahu, saying the EU was "committed to working with the incoming Israeli government" and to re-launch the Israel-Palestinian peace process.
Peace talks have been on hold since a last round collapsed a year ago.