Prime Minister Binyamin Netanyahu has claimed victory in Israel's election, despite unexpected losses to resurgent centre-left challengers.
Netanyahu gave a speech to his supporters at the Likud headquarters where he thanked Israelis for the opportunity to govern for a third term.
"I am proud to be your prime minister....and I want to carry forward changes, and in order to do that we need to construct a wide government, which I've started to do already," he said.
He went on to say this new government will be focusing on five points, the first and foremost being security and Iran.
"The first is the strength of security on threats against us, and to prevent Iran from having a nuclear weapon."
Israel's right-wing and centre-left blocs won an equal share of the country's 120-seat parliament, the Israeli Central Elections Committee said, with 99.5 percent of votes counted.
The body's website showed right-wing parties, led by Netanyahu's list, taking 60 seats, and centre-left parties, including Arab factions, also winning 60 seats.
Palestinian officials closely followed the Israeli election campaign, fearing Netanyahu's ambitious plans for settlement construction over the next four years could prove lethal to their dreams of a state.
Ahmed Assaf, spokesman for Fatah, the Western-backed party of Palestinian President Mahmoud Abbas, said: "The Palestinian people are the main losers from this duel between the racist right wing parties."
"This will cause damage to the peace process and for the Palestinian people also. In the meantime it will harm the Israeli people because there won't be security and safety for the Israeli people unless the Palestinians gain their rights."
Palestinians have low expectations for the peace process following the elections.
"Our situation will be worse than before because the settlements were built during Netanyahu's time," a Palestinian in the West Bank said.
The projections showed right-wing parties with a combined strength of 61-62 seats against 58-59 for the centre-left.
Al Jazeera's Sherine Tadros, reporting from Tel Aviv, said, "It will be interesting to see how he balances the demands of the different parties he'll be entering into coalitions with.
"A lot of people will tell you that those undecided were put off by the idea of far-right wingers dominating politics for the next four years," she said, referring to the drop in figures for Netanyahu.
The centrist Yesh Atid party, led by former television talk show host Yair Lapid, came second with 18 or 19 seats, exit polls showed - a stunning result for a newcomer to politics in a field of 32 contending parties.
Lapid won support among middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.
Following the results, Lapid posted just one word on his Facebook page: "Thanks".
The once dominant Labour party led by Shelly Yachimovich was projected to take third place with 17 seats.
Al Jazeera's Patty Culhane, reporting from Washington, DC, commented on the tense relationship between US President Barack Obama and Netanyahu.
"Officially in the US they are not really weighing in yet," she said, regarding Netanyahu's victory. "Behind the scenes, we know [President Barack] Obama and Netanyahu do not get along."
"President Barack Obama has faded the idea of the Palestinian peace process, as he doesn't believe Netanyahu wants peace," she said.
Official results will be announced on January 30 and the new government is likely to take office in mid-February.