While Netanyahu appeared positioned to serve a third term as prime minister, the results marked a major setback for his policies and could force him to make new concessions to restart long-stalled peace talks with the Palestinians.

More than 99 percent of the votes had been counted by Wednesday morning and results showed the hawkish and dovish blocs were split about evenly.

Netanyahu's most likely partner was Yesh Atid, or There is a Future, a party headed by political newcomer Yair Lapid that showed surprising strength.