A day after Israel’s general election, Benny Gantz’s Blue and White party conceded defeat against incumbent Prime Minister Benjamin Netanyahu’s Likud party on Wednesday.
"We didn't win in this round. We will make Likud's life hell in the opposition," Yair Lapid, number two in the centrist party led by former military chief Mr Gantz, said in a televised statement.
Mr Netanyahu’s right wing Likud looked set to be able to stay in power after Tuesday's national ballot with the support of religious and rightist parties, although both Likud and Blue and White won the same number of seats in the 120-member parliament.
The victory, despite corruption allegations against Mr Netanyahu, 69, puts him on a path to win his fifth term in office and become Israel's longest-serving prime minister later this year.
The result comes after one of the most toxic election campaigns in Israeli history. Mr Netanyahu aligned with Jewish supremacists, called the media enemies of the state, said his main rival would align with Arabs to scare voters, pledged to annex the occupied West Bank, and called on US President Donald Trump to recognise the occupied Golan Heights as Israeli territory only weeks before polls opened.
Mr Netanyahu’s office said Mr Trump had "warmly congratulated" the prime minister in a call from Air Force One.
A statement from his office said Mr Netanyahu thanked the president for his "great support for Israel," including the White House's recognition of Jerusalem as Israel's capital and Israeli sovereignty over the Golan Heights.
The close race between the two main parties had led to uncertainty after polls closed on Tuesday night. Both Mr Netanyahu and Mr Gantz claimed victory after the initial exit pools gave Blue and White the most seats.
Mr Netanyahu spoke in the early hours of Wednesday at Likud's post-election party in Tel Aviv and called it a "magnificent victory".
He said a right-wing government would lead Israel, but said he would "be prime minister for all".
The vote was expected to lead to frantic negotiations to form a coalition, even though Mr Netanyahu faced corruption charges.
He was criticised for engaging in populist rhetoric that amounted to the demonisation of Arabs and other groups.
Mr Netanyahu faced further criticism on election day when members of his Likud party brought small cameras into polling stations in Arab areas. Arab politicians called it an attempt at intimidation, while Mr Netanyahu said cameras would prevent fraud.
He also called the corruption investigations a "witch hunt" and denounced journalists covering them.
On Tuesday, he said Likud could lose the election because of low turnout among his supporters, a move widely considered to be an effort to motivate right-wing voters to go to the polls.
Mr Netanyahu has been prime minister since 2009, having also been in office from 1996 to 1999.
But he now faces the prospect of becoming the first sitting prime minister to be indicted.
Israel's attorney general announced in February that he intends to indict Mr Netanyahu for bribery, fraud and breach of trust pending a coming hearing.
The Palestinians have reacted to the results by saying that Israelis voted to "maintain the status quo" in the region.
Saeb Erekat, the chief Palestinian negotiator and secretary general of the Palestine Liberation Organisation, called the results a “clear-cut vote” to maintain a situation where there are no peace talks and the Israeli government is making unilateral moves to change the situation on the ground with the help of the US administration of President Donald Trump.
“They want us to live under a deeper apartheid system than that existed in the darkest hours of South African apartheid,” he said.
Before polls opened, Palestinian President Mahmoud Abbas said that he hoped the election would bring change and peace to the region. He said he hoped a new Israeli government would understand “peace is in ours, their and the world’s interests” after decades of conflict.
“All that we hope is there will be a just way, a correct way to reach peace,” he said. “We don’t need any government that doesn’t believe in peace.”
Mr Abbas has refused to engage with the Trump administration over its decisions to recognise Jerusalem as Israel’s capital. Israel has refused to engage with the Palestinians in talks that involve other parties, saying that discussions should only take place directly.