Netanyahu leads in Israeli election, but still lacks majority to form government

Israeli PrimeMinister Benjamin Netanyahu led the third election in a year but still fell short of a majority to form the government, nearly complete results showed.

Netanyahu claimed victory in Monday's vote over his main challenger Benny Gantz of the centrist Blue and White party, after exit polls projected the right-wing leader's Likud party had come out on top.

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"We turned lemons into lemonade," he told a cheering crowd at Likud's election headquarters as exit polls were released.

However, Gantz did not concede defeat, saying the election could result in another deadlock and he understood and shared his supporters' "feeling of disappointment and pain".

With some 90 per cent of the votes counted, Netanyahu appeared to control 59 seats in parliament, two short of a ruling majority.

The gap made former defence minister Avigdor Lieberman's far-right Yisrael Beiteinu party a potential kingmaker after remaining on the sidelines in inconclusive ballots in April and September, the report added.

A win for Netanyahu, 70, would be a testament to the political durability of Israel's longest-serving leader, who fought the latest campaign under the shadow of a looming corruption trial.

(With inputs from Reuters)