The centrist Kadima Party won a plurality of the seats in Knesset, the Israel parliament, in Tuesday's election beating out the right-wing Likud Party by a single seat.
The ninth and current Israel President Shimon Peres will call on Tzipora Malka "Tzipi" Livni, Kadima party leader to attempt to form a government through a coalition. This will be difficult for Livini as Hard line parties including Likud won a majority of the seats in the Knesset. Likud leader Benjamin Netanyahu might be tapped to form a coalition government if Livni fails. 65.2% percent of the voting population voted on Tuesday.
The key issue which has faced some 5.3 million registered voters, in 9,000 polling stations nationwide is which leader can best assure the security of the state while chances of a peace deal seem remote amid a campaign that generated little enthusiasm.
Political analysts are predicting that Mr. Netanyahu, not Ms. Livni, will be asked by Israel's president to form the next government. 
Both Ms. Livni and Mr. Netanyahu are courting the third-place Yisrael Beitenu Party, headed by Avigdor Lieberman. Yisrael Beitenu party which won 15 seats is seen as critical in securing the 61 seats required in the country's 120-seat parliament. 
Another possible political scenario would be a power-sharing government between Ms. Livni and Mr. Netanyahu, in which each leader would serve as prime minister for two years, rotating midway through the four year term. 
"Netanyahu and Livni complement one another. You have the common sense of Livni and the broader strategic vision of Netanyahu. Bibi needs her and she needs him,” said Daniel Schueftan, a senior Israeli academic and deputy director of the National Security Studies Center at the University of Haifa, where he also serves as a senior lecturer in the School of Political Sciences. 
The Knesset (כנסת) is the legislature of Israel, located in Givat Ram, Jerusalem. It was first convened on February 14, 1949, following the elections held on January 20th 1949. As the legislative branch of the Israeli government, it enacts laws, elects the president and prime minister (although s/he is ceremonially appointed by the President), supervises the work of the government, reserves the power to remove the President of the State and the State Comptroller from office and to dissolve itself and call new elections.

—--Tzipora Malka "Tzipi" Livni in 2006The composition of the current Knesset was determined by the 2006 election, the Seventeenth Knesset. Though it has not yet happened in the current session, in every Knesset to date (save the remarkably stable 1955 Third), parties have split up during the Knesset's term, leading to the creation of new parties or resulting in MKs sitting as independents. 
Last December, a record 43 parties had registered with the parties registrar, compared to 31 for the 2006 elections, although in the end, only 34 parties submitted a list of candidates. On 12 January 2009, Balad and the United Arab List–Ta'al alliance were disqualified by the Central Elections Committee on the grounds that they failed to recognise Israel as a Jewish state and called for armed conflict against it. Balad and Ta'al were also disqualified from the 2003 election, but won a Supreme Court case which allowed them to run. On January 21, the Supreme Court, by a vote of 8 to 1, again revoked the ban.
Every 4 years (or sooner if an early election is called, as is often the case), 120 members of the Knesset (MKs) are elected by Israeli citizens who must be at least 18 years old to vote. The Government of Israel must be approved by a majority vote of the Knesset. 120 seats are allocated by party-list proportional representation, using the d'Hondt method. The election threshold for the 2006 election was set at 2% (up from 1.5% in previous elections), which is a little over two seats.   
After official results are published (on February 18, in this election), the President of Israel delegates the task of forming a government to the Member of Knesset with the best chance of assembling a majority coalition (usually the leader of the largest party.) That designee has up to 42 days to negotiate with the different parties, and then present his government to the Knesset for a vote of confidence. Once the government is approved (by a vote of at least 61 members), he/she becomes Prime Minister.
Kadima leaders believe that Livni can form a coalition with at least Labor, Meretz and Israel Beiteinu. Livni and Netanyahu have started meeting with potential government coalition partners, Livni with Avigdor Lieberman of ultranational party, Yisrael Beiteinu and Netanyahu with Eli Yishai of the Shas, an ultra-Orthodox party.
Benjamin "Bibi" Netanyahu (בִּנְיָמִין "ביבי" נְתַנְיָהוּ) was the 9th Prime Minister of Israel (June 1996 to July 1999) and is Chairman of the conservative Likud Party. He is the first (and to date only) Prime Minister of Israel to be born after the State of Israel's foundation.
Netanyahu was Finance Minister of Israel until 9 August 2005, having resigned in protest at the Gaza Disengagement Plan advocated by Prime Minister Ariel Sharon. He retook the Likud leadership on 20 December 2005. 
As of December 2006, he became the official leader of the Opposition in the Knesset and Chairman of the Likud Party. In August 2007 he retained the Likud leadership by beating Moshe Feiglin in party elections.  
On May 4, 2006, Ehud Olmert (אהוד אולמרט) became the 12th and current Prime Minister of Israel. He was the mayor of Jerusalem from 1993 to 2003, was elected to the Knesset and became a minister and an Acting Prime Minister in the government of Prime Minister Ariel Sharon. 
On January 4, 2006, after Sharon suffered a severe hemorrhagic stroke, Olmert began exercising the powers of the office of Prime Minister. He led Kadima to a victory in the March 2006 elections (just two months after Sharon had suffered his stroke) and continued on as Acting Prime Minister. 
On April 14, 2006, Sharon was declared permanently incapacitated, allowing Olmert to legally become Interim Prime Minister. On 4 May, 2006, Olmert and his new, post-election government were approved by the Knesset, thus Olmert officially became Prime Minister of Israel.
Olmert faced corruption charges amid a challenge for leadership from Kadima by Foreign Minister Tzipora Malka "Tzipi" Livni (ציפורה מלכה "ציפי" לבני), age 50, the Vice-Prime Minister and Minister of Foreign Affairs of Israel. Livini is a lawyer, mother-of-two and former agent for Mossad Israel's foreign intelligence agency who has moved from a strongly Zionist nationalist background to become a leading Israeli advocate of a two-state solution with Palestinians. 
On July 30, 2008, Olmert announced that he would not seek re-election as party leader and that he would resign from his position as Prime Minister immediately after a new Kadima leader was named. On September 17, 2008, Livni won the election and became the new leader of the Kadima party. She sought to form a new government that would gain support from a majority of the Knesset. 
After failing to reach agreement with various parties, Livni's attempts at forming a new government were unsuccessful and instead an election was scheduled for February 10, 2009. Aside from Livini and Netanyahu, the other candidates were Ehud Barak, the 10th Prime Minister of Israel, and current Minister of Defense, deputy prime minister and leader of Israel's centre-left Labor Party, and Avigdor Lieberman, the leader of the far-right party Yisrael Beiteinu. 
The hiatus allowed Olmert to cling to his Prime Minister post for at least a further five months as head of a caretaker government. On December, 2008, Operation Cast Lead was launched on Gaza. The February 10 election came three weeks after a 22-day Israel–Gaza conflict, where Israeli military offensive in the Palestinian-ruled Gaza Strip killed more than 1,300 Palestinians and 13 Israelis. 
Meanwhile, Avigdor Lieberman, whose Yisrael Beiteinu faction received 15 Knesset seats, thereby holding the key to the makeup of the 18th Knesset, has on Thursday  unexpectedly departed for vacation abroad, leaving his suitors from Kadima and Likud -- as well as the Israeli public -- in the dark about his intentions. 
“Our position is already clear and I know exactly what I am going to tell President Shimon Peres. [But] in order to know whom we are going to recommend, we will wait six more days,” Lieberman said. “I think it is too early and there is no point saying whom we support. I have met with both Livni and Netanyahu and with additional people in the political system but my position is already clear and solid. When we go to the President we will say very clear things,” he added.
The Israeli Central Elections Committee, charged under the 1969 Knesset Elections Law to carry out the elections for the Knesset has planned to release the final results on February 18 after tallying more than 150,000 ballots, consisting mainly of votes of absentees (those from abroad - soldiers in military camps and foreign service staff, overseas diplomat missions, prisoners, hospital staff, and surplus votes that are calculated to move to other parties to form the final results within 48 hours of the closing of the polls). 
These remaining votes could tip the balance in the gridlocked election and determine the leadership. The elections officials have also released the List of Knesset members. *The Knesset Board of Elections on Thursday states on their site that results are "final but not official."
The unofficial election results (based on 99.7% of votes) has raised one question - whether Netanyahu might be chosen to serve as Prime Minister, given Likud's possible political ability to form a coalition with Yisrael Beiteinu. Another alternative was for Kadima to form a national unity government. But this has seemed unlikely given that it would probably require Tzipi Livni to win Likud's support for any such unity coalition. 
The real resolution of the electoral deadlock has hinged on the actions of President Shimon Peres, age, 85, a Nobel Peace Prize laureate, as the official in charge of deciding which party should be chosen to form a governing coalition. Observers have pointed to his personal political similarities with Livni as one possible reason for choosing Kadima. On the other hand, Netanyahu's ability to form a true coalition also seemed like one significant consideration. 
However, the stability of a right-wing/religious coalition is questionable. The six right wing parties control just 65 seats, leaving such a coalition vulnerable to internal dissention. In any case, President Peres has announced that he will not entertain any attempts to form a government until February 18, when the final results will be certified.
President Barack Obama has phoned Peres Wednesday and wished him well in overseeing the formation of a new government. “You have only two political parties -- we have 12,” Peres told Obama. The new coalition government that emerges after February 18, whether it is led by hard-line Netanyahu or his moderate rival, Tzipi Livni, is likely to find common ground on two burning issues: Hamas and Iran. 
Two dire scenarios emerged Wednesday as President Obama faces double dilemmas in Mideast: a narrow coalition of hawks who would stall peacemaking with the Palestinians and a power-sharing arrangement that would give Israel a more moderate face and greater international support. 
"We want to do things differently in the region. That would involve accelerating efforts to promote Mideast peace talks as well as having discourse with Iran in an environment of mutual respect," Obama said at his White House news conference Monday. "We certainly hope that a new (Israeli) government will continue to pursue a path to peace. I see no reason to think a new government would do something otherwise," US State Department spokesman Robert Wood said.
"Divisions in the Israeli electorate are likely to create 'paralysis in the political process' during the period of coalition building and perhaps beyond. This could lead to an extended "hiatus" in peacemaking while the Palestinians confront their own deep political divisions. Nevertheless, the United States should work hard to firm up the Gaza cease-fire and not to give up on the longer-term goal of a two-state solution," said Daniel C. Kurtzer, a former top U.S. diplomat in the Mideast and a recent adviser to Barack Obama.
"The Israeli political system has been fractured and at odds with itself for many years, so having an outcome in which the two big blocs--the center-right and moderate-right blocs--split the vote was not at all unexpected. There will be a paralysis in the political process, certainly during the period of coalition building and perhaps even beyond, depending on what kind of coalition emerges. The hiatus in peacemaking could be rather extended," he explained.

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Israel elects 18th Knesset