Israeli Prime Minister Benjamin Netanyahu has all but secured a record fifth term in office in this neck-and-neck race, leaving his centrist challenger scrabbling on Wednesday to win over coalition partners to form the next government.

With over 97 per cent of the vote now counted, the tally showed Mr Netanyahu’s Likud party and its main rival, the Blue and White party, deadlocked with 35 seats each of the 120 in the Knesset. Both leaders initially claimed an elections win and, off the back of exit polls, delivered almost simultaneous victory speeches late Tuesday.

However as the votes continued to come in, Likud and its ultra nationalist ring-wing partners looked set to forge a 65-55 majority in parliament, meaning Mr Netanyahu was more likely to be tasked with forming the next government.

Fearing defeat, ex-army chief Benny Gantz, who leads the centrist Blue and White alliance, pleaded with potential partners Wednesday morning.

“Reports tell an unfinished story. Yes, odds may not seem in our favour but two things are missing: The first is certainty, as there is still a possibility of electoral shifts that will allow us to engage in various political endeavours,” Lt. Gen Gantz said in a statement.

“Our voters… wanted a different path and we carved it out for them. We will not stand down from our civil duty to represent over a million citizens who searched for an alternative,” he added.

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Likud sounded more confident and defiant.

Rachel Broyde, a spokeswoman told The Independent: “We are already in contact with our partners in the hopes of building a coalition... the vibes are very positive. We are very confident we can build a right-wing coalition”.

Smaller parties, including the New Right, one of Mr Netanyahu’s would-be partners, were still fighting for survival. They have to surge past the 3.25 per cent electoral threshold needed to win a seat in the Knesset.

Final results are expected on Thursday when the make-up of the parliament will be revealed.

Since no single party won an outright majority, Israel’s President Reuven Rivlin will consult with the leaders of every party that secured seats in the Knesset about who they would prefer to be prime minister.

The president will then choose which leader he believes has the best chance of putting together a fresh government. They have 42 days to do so: if they fail another politician is tasked with trying.

As it stands, Mr Netanyahu and his Jewish ultra-Orthodox and nationalist partners together appear to have the largest and only majority in the 120-seat parliament.

If the premier does secure a victory, it would be his fourth consecutive term and fifth overall, making him Israel’s longest serving leader, surpassing founding father David Ben-Gurion.

This is despite the fact he has campaigned under the shadow of possible indictment. In February, the country’s attorney-general announced he planned to send Mr Netanyahu to trial in three corruption cases, initially delivering a blow to the leader’s popularity.

Likud ministers at the party headquarters in Tel Aviv early Wednesday told The Independent the fact the leader had secured even more seats this election than the last polls in 2015 with the legal threat to him, “proved” he had the nation’s support.

“Our strategy proved itself... Netanyahu proved he can run the country even under police investigation,” Gilad Erdan, Likud Minister of Strategic Affairs said.

At the Blue and White base just a few hundred metres away, parliamentarians said that the fact that an entirely new political alliance led by an elections newcomer succeeded in sweeping so many seats, showed the country wanted change.

(AFP (AFP)

“After two months who would have believed we would be able to succeed in such a clear way,” said Yael German, a current Knesset member who is on the alliance’s list.

Hours earlier Lt.Gen Gantz had addressed boisterous crowds saying: “We are the winners!”

To fireworks and glittering confetti a jubilant Mr Netanyahu, meanwhile, declared the elections to be a "tremendous victory” for him.

Netanyahu's supporters celebrate what he said was a Likud win at their headquarters in Tel Aviv (Bel Trew)

"I want to make it clear, it will be a right-wing government, but I intend to be the prime minister of all Israeli citizens, right or left, Jews and non-Jews alike," he said.

His words did little to reassure the Palestinian leadership, who have expressed serious concerns about his controversial pre-election promises to annex the occupied West Bank, a key demand of the right but illegal under international law.

This and other divisive statements and decisions likely drove a lot of Arab-Israelis, many of whom identify as Palestinian, to boycott the polls. Leading Israeli pollsters said there was a record low turnout of Arab voters.

Hanan Ashrawi, a senior Palestinian official, said the elections results showed Israel chose to entrench "the status quo of oppression, occupation, annexation and dispossession”.

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Ahmed Majdalani, a senior aide to Palestinian President Mahmoud Abbas, said the outcome of the elections meant a boost for the “extreme right-wing camp" in Israeli politics.