With almost all the votes counted, the governing centrist Kadima has 28 seats and the right-wing Likud opposition 27, election officials said.
Kadima's Tzipi Livni told supporters she was ready to lead the country. But Likud's Benjamin Netanyahu said the "nationalist camp" had won.
Both need coalition partners. Ultra-nationalist Yisrael Beitenu came third.
Although Israel may not have a government for weeks, the results of the election are already in. Though it appeared before the election that the Likud party (headed by Benjamin Netanyahu) was set to win, the Gaza many commentators noted the Gaza offensive may have given a bump to their centrist rivals, Kadima (headed by Tzipi Livni).
The BBC article quotes Netanyahu as stating that the "nationalist camp" has won. I think he is right, and that he will be forming the next government. Likud sowed up a relationship with Shas (a orthodox party). The big story is that Avigdor Lieberman's Yisrael Beitenu Party beat labor into third place in terms of votes. Lieberman advocates loyalty oaths for Arab Israeli and execution of MKs that meet with Hamas. His supporters have been known to shout "death to Arabs" awaiting their hero.
To quote Marty Peretz of all people:
In the last elections, it was the Pensioners' Party that surprised everybody by its strength, which pivoted it into the Cabinet. This year, alas, it is likely to be the Yisrael Beiteinu (Israel is Our Home) Party, a neo-fascist list headed by a Russian immigrant and certified gangster, Avigdor Lieberman, who is the Israeli equivalent of Jorg Haider of Austria (now dead) and Jean-Marie LePen who, with Bridgitte Bardot, is a leader of National Front in France, who once overwhelmed the country's Socialist Party.
Both Kadima and Likud are eager to include Lieberman in a coalition, instead of avoiding him like the plague as they should be (this would not, though, be the first time Lieberman has been in coalition). Likud seems a natural choice for Lieberman. Extremism is also rising in the Likud itself. None of this looks good for a potential peace.