With around 84 percent of the vote counted at 0755 GMT, according to the Central Elections Committee, Netanyahu could be set for a dramatic comeback.
But his main rival, caretaker Prime Minister Yair Lapid, told his own supporters in Tel Aviv that “nothing is decided”, and that his centrist Yesh Atid party “will wait patiently… for the final results”.
The former premier is buoyed by the rise of the extreme-right Religious Zionism bloc of Itamar Ben-Gvir, which made major gains and is expected to emerge as the third-largest party.
But small parties whose seats could play a crucial role in coalition talks are teetering on the edge of the electoral threshold.
The official count put Likud on track for a first-place finish, with 31 seats.
An outright victory for the bloc would end the short reign of an alliance of eight parties under Lapid that managed to oust Netanyahu last year.
Yael Shomer, a senior lecturer in politics at Tel Aviv University, told AFP the count was “on pins and needles”.
In a climate of grinding political deadlock, concerns about voter fatigue were widespread, but in the end 71.3 percent of voters turned out, the highest rate since 2015, according to official figures.
Far-right leader Itamar Ben-Gvir would be key to helping Netanyahu return to power, with his Religious Zionism bloc on track for 14 seats, according to the latest results, double its current presence in parliament.
Read the article in The Australian (AFP) with an update here.