Israeli president Reuven Rivlin has asked Benjamin Netanyahu to form a governing coalition after talks with his rival Benny Gantz to establish a unity government stalled.
Israel held elections on September 17 in an effort by Netanyahu to increase his majority in parliament, but his Likud party received one fewer seat than Gantz's Blue and White coalition.
Rivlin announced on Wednesday that he would ask Netanyahu to put together the 61 seats he needs to form a government. He has 28 days to do so and can ask for an extra two weeks if needed.
It will be a tough challenge for Netanyahu who is eyeing an historic fifth term as prime minister of Israel.
One of his former allies, Avigdor Lieberman, who received eight seats for his Yisrael Beiteinu party, has said he will not support a government led by Netanyahu.
Meanwhile, the Arab-dominated Joint List party - which will become the third-largest in Israel's parliament for the first time - has backed Gantz as prime minister.
Latest numbers have Netanyahu's coalition of right-wing and religious parties on 55 pledged seats, with the Blue and White coalition on 56.
Lieberman is yet to back either candidate. On the one hand, the veteran right-winger will be reluctant to join forces with the Arab-dominated Joint List in supporting Gantz, but equally reluctant to support a Netanyahu government that he expressly ruled out during the election.