Israeli Prime Minister Benjamin Netanyahu has secured a clear path to re-election, with religious-rightist parties set to hand him a parliamentary majority and his main challenger conceding defeat.

With more than 99 per cent of votes counted – ballots cast by soldiers at military bases will be tallied over the next two days – Mr Netanyahu’s conservative Likud Party looked likely to muster enough support to control 65 of the Knesset’s 120 seats, making him head of the next coalition government.

It would be Mr Netanyahu’s record fifth term as premier.

In a televised statement, Yair Lapid, No. 2 in the centrist Blue and White party led by former general Benny Gantz, said: “We didn’t win in this round. We will make Likud’s life hell in the opposition.”

US President Donald Trump, who Mr Netanyahu featured on campaign billboards to highlight their close relationship, phoned to congratulate him on his re-election, the Israeli leader said, adding that he thanked his American ally for “tremendous support for Israel”.

Israeli President Reuven Rivlin said on Twitter he would begin meeting next week with political parties that won parliamentary seats to hear who they support for prime minister.

At the sessions, which Mr Rivlin said would be broadcast live “to ensure transparency”, he will then pick a party leader to try to form a coalition. They will have 28 days to do so, with a two-week extension if needed.

The close and often vitriolic contest was widely seen in Israel as a referendum on Mr Netanyahu’s character and record in the face of corruption allegations.

He faces possible indictment in three graft cases, and has denied wrongdoing in all of them.

Despite that, Mr Netanyahu gained four seats compared to his outgoing coalition government, according to a spreadsheet published by the Central Elections Committee of parties that garnered enough votes to enter the next parliament.

“It is a night of colossal victory,” the 69-year-old Netanyahu told cheering supporters in a late-night speech at Likud headquarters in Tel Aviv after Tuesday’s vote.

“He’s a magician!” the crowd chanted as fireworks flared and Netanyahu kissed his wife Sara. Earlier that night, Mr Gantz had claimed victory.

Mr Netanyahu is poised to become, in July, the longest-serving Israeli prime minister, overtaking the country’s founding father, David Ben-Gurion. That could be scuppered if criminal charges are filed and force his removal.

An indictment decision would follow a review hearing where Mr Netanyahu can be expected to argue he should be spared in the national interest.

Some analysts predict he may try to pass a law granting himself immunity, as a sitting leader, from trial.

During the campaign, the rival parties accused each other of corruption, fostering bigotry and being soft on security.

Israel’s 21 per cent Arab minority saw its parties lose seats. Voters blamed divisions between Arab factions which had united in the previous election, disillusionment, and a voting boycott campaign rooted in dismay at the 2018 “nation-state” law declaring that only Jews have the right of self-determination in Israel.

In Taybeh, an Arab town, Hadash party official Hosam Azem, 52, said: “Arabs who don’t vote, most of them don’t do it for ideological reasons – just because they don’t think their vote will have an impact,” he said.

-AAP