Netanyahu wins but weakened by centrists

Benjamin Netanyahu's rightwing Likud-Beitenu list has won the Israeli election by a narrow majority. Source: AAP

ISRAELI Prime Minister Benjamin Netanyahu is expected to remain in power despite the poor showing by his Likud-Beiteinu list, which will push him into an alliance with the centrist Yesh Atid, the surprise winner of Tuesday's vote.

According to exit polls, Likud-Beiteinu, the joint list uniting Netanyahu's Likud with the hardline nationalist Yisrael Beiteinu, suffered a serious setback, winning just 31-33 mandates in the 120-seat Knesset, down from 42 in the outgoing coalition.

The centrist Yesh Atid, launched in April 2012 by former TV anchor Yair Lapid, made an unexpectedly strong showing, becoming the country's second party with 18-19 deputies, ahead of the centre-left Labour, with 15-17.

In a swift turnaround, Netanyahu promised to build a coalition which was "as broad as possible".

He also called Lapid, telling him: "We have an opportunity to do great things for Israel. The election campaign is behind us, and we can now focus on action for the benefit of all of Israel."

Overnight, the 49-year-old former media star with a polished appearance has been transformed into Israel's newest kingmaker.

"I call on political leaders to work with me, together, to form the widest possible government which will include moderate elements from the left and the right to bring about real change," Lapid told supporters at his Tel Aviv campaign headquarters.

"It is the party of normality. We have gathered all the components of society with the hope of changing things in Israel," said Shai Piron, number two on Yesh Atid's list.

Israel's army radio said given the results Netanyahu "has no choice but to offer Yair Lapid one of the three major portfolios - defence, foreign affairs or finance".

Lapid has become "the most important player in the political system", agreed Haaretz columnist Yossi Verter.

"Since he doesn't see himself as prime minister - and it's hard to see him putting together a coalition even if he did - he has two choices: become head of the opposition, or the most senior and influential minister in the third Netanyahu government," he wrote.

"If the exit polls are accurate, Netanyahu, Lapid and Bennett between them have 62 seats - enough to form a government. Such a government could implement many desperately needed reforms: changing the system of government, drafting the ultra-Orthodox, passing a responsible budget."

Netanyahu's natural allies are the right-wing and religious parties, among them the far-right nationalist religious Jewish Home, which won 12, as well as the ultra-Orthodox parties, Shas and United Torah Judaism, which won 11-13 and six seats respectively.

The new centrist HaTnuah of former foreign minister Tzipi Livni, which campaigned to restart peace talks with the Palestinians, was seen taking seven, with 6-7 for the leftwing Meretz, and 8-11 for the three main Arab parties.

Final results are not expected to be released until the early hours of Wednesday.

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