Prime Minister Benjamin Netanyahu claimed victory in Israel's election tonight after exit polls suggested he was set to lead a right-wing government with a narrow majority in parliament.

"According to the exit polls, it is clear that Israelis decided that they want me to continue serving as Prime Minister, and that I form as broad a government as possible," Mr Netanyahu said on his Facebook page.

Polls suggested his right-wing Likud party and the ultra-nationalist Yisrael Beitenu group would still be the biggest bloc in the 120-member assembly with 31 seats.

They held 42 in the previous parliament.

If the exit polls compiled by three Israeli television channels prove correct, Mr Netanyahu would be on course to secure a third term in office, perhaps leading a hardline coalition that would promote Jewish settlement on occupied land.

However, his weakened showing in an election he himself called earlier than necessary could complicate the struggle to forge an alliance with a stable majority in parliament.

The projections showed right-wing parties with a combined strength of 61-62 seats against 58-59 for the centre-left.

After a lacklustre campaign, Israelis voted in droves on a sunny winter day, registering the highest projected turnout since 1999 when Mr Netanyahu, serving his first term as prime minister, was defeated by then-Labour Party leader Ehud Barak.

The strong turnout buoyed centre-left parties which had pinned their hopes on energising an army of undecided voters against Netanyahu and his nationalist-religious allies.

The centrist Yesh Atid (There is a Future) party, led by former television talk show host Yair Lapid, came second with 18 or 19 seats, exit polls suggested - a stunning result for a newcomer to politics in a field of 32 contending parties.

Mr Lapid won support amongst middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.

The once dominant Labour party led by Shelly Yachimovich was projected to take third place with 17 seats.

A stream of opinion polls before the election had predicted an easy win for Mr Netanyahu.

The final opinion polls on Friday showed his Likud-Beitenu group still on top, but losing some ground to the Jewish Home party, which opposes a Palestinian state and advocates annexing chunks of the occupied West Bank.

The exit polls projected 12 seats for Jewish Home.

Full election results are due by tomorrow morning and official ones will be announced on 30 January.

After that, President Shimon Peres is likely to ask Mr Netanyahu, as leader of the biggest bloc in parliament, to try to form a government.