The leaders of Israel's two main political parties have claimed victory in Tuesday's election. Israeli foreign minister Tzipi Livni's governing Kadima party has won the most seats - 28, election officials say.
Opposition leader Benjamin Netanyahu also claimed victory, saying the "nationalist camp" had won. His right-wing Likud party won 27 seats, according to early results.
Mr Netanyahu told his supporters that he will form a coalition with smaller parties. Based on exit polls, analysts project Likud and other nationalist parties have 65 of 120 seats in the Knesset.
One of those Likud partners could be Avigdor Lieberman's ultra-nationalist Yisrael Beitenu, which polled in third place, according to election officials.
Mr Lieberman's strong showing has pushed the Labour party of Defence Minister Ehud Barack into an unprecedented fourth place.
Ms Livni told supporters that she would form a national unity government and invited Likud to join her. The closeness of the vote, however, will likely lead to protracted negotiations.
Once the final results are in, President Shimon Peres will ask one of the party leaders to form a government within 42 days.