Israel's opposition leader has conceded defeat in the country's election.

Isaac Herzog, who heads the centre-left Zionist Union, said he had called prime minister Benjamin Netanyahu to offer congratulations for his election victory.

Mr Netanyahu's Likud party appeared to have earned 30 out of parliament's 120 seats and was in a position to build a coalition government with nationalist, religious and ultra-Orthodox Jewish allies.

The Zionist Union won 24 seats.

Mr Herzog, who days ago appeared poised to win, signalled that he would be heading the opposition.

Speaking to reporters outside his Tel Aviv home, he said that Israel needed "another voice, a voice that offers an alternative and a voice that tells it the truth".

The election was widely seen as a referendum on Mr Netanyahu, who has governed the country for the past six years.

Recent opinion polls had indicated he was in trouble, giving Mr Herzog a slight lead.

Exit polls had showed the two sides deadlocked, but once the results started coming in, Likud soared forward.

Even before the final results were known, Mr Netanyahu declared victory and pledged to form a new government quickly.

"Against all odds, we achieved a great victory for the Likud," he told supporters at election night headquarters.

"I am proud of the people of Israel, who in the moment of truth knew how to distinguish between what is important and what is peripheral, and to insist on what is important."

Nr Netanyahu focused his campaign on security issues, while his opponents instead pledged to address the country's high cost of living and accused the leader of being out of touch with everyday people.

His return to power for a fourth term probably spells trouble for Middle East peace efforts and could further escalate tensions with the US.

Mr Netanyahu, who already has a testy relationship with President Barack Obama, took a sharp turn to the right in the final days of the campaign, staking out a series of hardline positions that will put him at odds with the international community.

In a dramatic policy reversal, he said he now opposes the creation of a Palestinian state - a key policy goal of the White House and the international community.

He also promised to expand construction in Jewish areas of east Jerusalem, the section of the city claimed by the Palestinians as their capital.

Mr Netanyahu infuriated the White House early this month when he delivered a speech to the US Congress criticising an emerging nuclear deal with Iran.

The speech was arranged with Republican leaders and not co-ordinated with the White House.