Israel (and Beyond) Live Coverage: Election Day

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2045 GMT: Israel. Exit polls, announced at the close of balloting 45 minutes ago, indicate Prime Minister Benjamin Netanyahu's right-wing alliance has a narrow lead in the Knesset but has lost ground to centre-left parties.

Netanyahu now faces the task of forging a new coalition Government with only 31 seats for the alliance between his Likud Party and the nationalist Yisrael Beitenu. Sixty-one members are needed for a majority in the 120-seat Knesset.

He is expected to seek an alliance with a new nationalist party, Habayit Hayehudi, led by the emerging politician Naftali Bennett. It is expected to win 12 seats, the same number as the religious Shas Party.

The surprise of the election may be the centre-left Yesh Atid (There is a Future) party, which has finished second to the Likud-Beitenu coalition and just ahead of Labour.

Yesh Atid, led by journalist-turned-politician Yair Lapid, is projected at 18 or 19 seats and Labour with 17.

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Israel Feature: Netanyahu and Opposition Agree "Unity Government" (Lis/Bar-Zohar)

A Facebook "advertisement" for the Kadima Party after it joined the "Unity Government": "An orthopedic chair made of elephant skin, particularly suitable for the 'spineless'. The chair moves forward [Kadima], backward, right and left and can be found in various colors. Price: Principles. Payment method: 15 months"

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Prime Minister Benjamin Netanyahu and opposition chairman MK Shaul Mofaz (Kadima) reached a surprise agreement early Tuesday morning to form a national unity government.

The move came as the Knesset was preparing to disperse for early elections, which were expected to be scheduled for September 4.

Under the agreement, Kadima will join Netanyahu's government and commit to supporting its policies through the end of its term in late 2013. Mofaz is expected to be appointed deputy prime minister, as well as minister without portfolio.

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