Israeli Prime Minister Benjamin Netanyahu claimed a narrow election victory and vowed to stop Iran from acquiring nuclear weapons.
Exit polls - which are normally correct in Israel - showed the Israeli leader's right-wing Likud and the ultra-nationalist Yisrael Beitenu would remain the biggest bloc in the 120-member assembly, but with only 31 seats, 11 fewer than the 42 the two parties held in the last parliament.
Netanyahu, who is on course for his third term in office, told a cheering crowd: "I am proud to be your prime minister, and I thank you for giving me the opportunity, for the third time, to lead the state of Israel."
He added: "The first challenge was and remains preventing Iran from obtaining nuclear weapons."
The Israeli leader also said he planned to form "as broad a government as possible" - meaning Netanyahu is likely to call Yair Lapid, a former television anchorman whose centrist party came from nowhere to second place.
Singing and dancing greets the exit poll result at the Prime Minister's party headquarters, even though there seems little for them to celebrate.
Netanyahu has just thanked voters for re-electing him. The truth is that his hawkish coalition has dropped 11 seats.
The exit poll projection is worse than the most pessimistic forecast for the Israeli Prime Minister. If correct, he has lost seats to the centre and the far right and will need to do deals with both sides to form a coalition government. No easy task.
The exit poll suggests that predictions that Israel would take a decisive lurch to the far right have been confounded. The centre and centre left have performed better than expected. One seasoned Israeli pundit just told me; "The voters have just saved Israel from itself."
The Prime Minister's advisor says he will try to form broad coalition, meaning a deal with the new centrist party that is the big winner tonight.
For sure Netanyahu will not want to be the most moderate voice in a right wing coalition.
Centre party leader Yair Lapid with, maybe, 19 seats is the new kingmaker. Certainly the surprise winner of the night.
Exit polls give Benjamin Netanyahu just 31 seats in the next Israeli parliament.
It's a very poor result but he might still be favourite to remain prime minister.
Overall, the right wing parties have 61; the centre left and Arabs have 59.
The projection is worse than the most pessimistic forecast for Netanyahu.
If correct, he has lost seats to the centre and the far right and will need to do deals with both sides to form a coalition government. That's no easy task.