The Israeli President Moshe Katsav is holding talks with party leaders after election results last week made it likely there will be a coalition government.
Observers say most party leaders are expected to back Ehud Olmert, the head of the centrist Kadima party, as prime minister.
Despite winning the election, Kadima won only 29 seats in the 120-member parliament.
Interim Prime Minister Olmert must put together a coalition with several parties to have a majority in favour of a planned West Bank pullout.
The leading candidate to join Olmert’s government is the centre-left Labour party led by Amir Peretz. It won 20 seats in the ballot. It is understood Peretz has set his sights on the job of finance minister.
The ultra-Orthodox party Shas is also a leading candidate in a coalition government, along with Torah Judaism and the new Pensioners’ Party.