A linchpin far-right Israeli party has said it could join a coalition government under either centrist Tzipi Livni or the hawkish Benjamin Netanyahu, rivals for the premiership in a close election.
Avigdor Lieberman told Yisrael Beiteinu party supporters that they would not rule anyone out.
Exit polls showed his party closely trailing Ms Livni'sKadima and Mr Netanyahu's Likud.
Mr Lieberman said his 'heart's desire' was a 'nationalistic' government.
Israel began voting in national elections with Benjamin Netanyahu bidding to oust the centrist party of Tzipi Livni.
The short campaign was overshadowed by Israel's war with Hamas in Gaza.
The key issue facing voters is which leader can best assure the security of the state while chances of a peace deal seem remote.
Some 5.3 million people are eligible to vote, in 9,000 polling stations nationwide.
The campaign generated little enthusiasm, and cold, rainy weather across the country increased the possibility that there would be a low turnout.
Likud party leader Mr Netanyahu, once a clear frontrunner in opinion polls, has lost ground to Ms Livni since the 22-day war last month in which 1,300 Palestinians and 13 Israelis were killed, locking the two in a statistical dead heat.
Defence Minister Ehud Barak, a third prominent candidate, trails both Mr Netanyahu and Ms Livni, though his poll numbers have more than doubled since the Gaza war.
The race could be determined by how many votes the smaller parties garner or the ballots of 10-to-15% undecided voters.
Right-wing Avigdor Lieberman, a potential spoiler for Mr Netanyahu, has seen his popularity soar since the war.
Israelis vote by party, and parliament seats are allocated by proportional representation to national party lists. The party garnering the most votes traditionally has its leader designated to form a government or become prime minister.
The political haggling involved in forming a new government could take weeks. Prime Minister Ehud Olmert, the outgoing leader who quit in a corruption investigation in September, would stay on as caretaker premier until a new cabinet is sworn in.
Ms Livni, 50, would become the first female prime minister since Golda Meir in the 1970s.
Mr Netanyahu, 59, a former finance minister, and Mr Barak, 66, a former general, have also served previously as prime minister.
