Israelis have voted in an election expected to see Benjamin Netanyahu win a third term as prime minister, pushing the Jewish state further to the right, away from peace with the Palestinians and towards a showdown with Iran.

However, Mr Netanyahu's Likud Party – running alongside the ultra-nationalist Yisrael Beitenu group – could have fewer seats than in the previous parliament, with opinion polls showing a surge in support for the far-right Jewish Home party.

No Israeli party has ever secured an absolute majority, meaning Mr Netanyahu will have to bring various allies onboard to control the 120-seat Knesset.

Loading article content

Political sources said the former commando, concerned by his apparent fall in popularity, might approach centre-left parties in an effort to broaden his coalition and present a more moderate face to Washington and other concerned allies.

However, he has traditionally looked to religious, conservative parties for backing and is expected to seek out the surprise star of the campaign, self-made millionaire Naftali Bennett, who heads the Jewish Home Party.

Mr Bennett has ruled out any peace pact with the Palestinians and calls for the annexation of much of the occupied West Bank. His youthful dynamism struck a chord with Israelis, most of whom no longer believe in the possibility of a Palestinian peace deal.

Among the parties standing for the first time in an election were Yesh Atid (There is a Future) a centrist group led by former television host Yair Lapid.

He has not ruled out joining a Netanyahu cabinet, but is pushing hard for ultra-Orthodox Jews to do military service – a demand fiercely rejected by some allies of the prime minister.

Israel's main opposition party, Labour, has already ruled out a repeat of 2009, when it initially hooked up with Mr Netanyahu, promising to promote peace negotiations with the Palestinians.

The talks collapsed just a month after they started in 2010, after a row over settlement building, and have laid in ruins ever since.

Palestinian President Mahmoud Abbas says he won't return to the table unless there is a halt to settlement construction. That looks unlikely, with Mr Netanyahu approving 11,000 settler homes in December alone.

Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago. Mr Netanyahu said the turbulence – which brought Islamist governments to power in several countries – showed the importance of strengthening national security.

If he wins, he will seek to put Iran back on top of the global agenda. He has said he will not let Tehran enrich enough uranium to make a single nuclear bomb – a threshold Israeli experts say could arrive as early as mid-2013.

But the issue has barely registered in the election campaign. A poll said 47% of Israelis thought social and economic issues were the most pressing concern, against just 10% who cited Iran.

The stuttering economy will be one of the first problems to face the next government, which is unlikely to take power before the middle of next month.