Benjamin Netanyahu has failed to win a ruling majority, according to news agency Reuters published on Wednesday.
The election, which came out as a virtual tie between his right-wing bloc and a centre-left grouping led by former military chief Benny Gantz.
The results are a blow to Israel's longest-serving leader who is already weakened by the inability to put together an administration after an inconclusive election in April.
With Israeli media reporting more than 90 per cent of votes counted in Tuesday’s election, the bloc led by Netanyahu’s Likud party was more or less even with a likely grouping headed by Gantz’s centrist Blue and White party.
The ballot’s wildcard, former Defence Minister Avigdor Lieberman, emerged as a likely kingmaker as head of the secular-nationalist Yisrael Beitenu party, projected to capture nine seats.
(With inputs from agencies)