Israeli Prime Minister Benjamin Netanyahu contacted two potential coalition partners Thursday, in his first, informal, steps towards forming the country's next government, DPA reported.
Votes from soldiers, diplomats and prisoners, which were counted Thursday, gave one more seat, under Israel's proportional representation system, to the ultra-nationalist Jewish Home party at the expense of the United Arab List.
Netanyahu, whose Likud-Beteinu coalition won 31 seats, met in Jerusalem with Yair Lapid, leader of the centrist Yesh Atid party, which unexpectedly became the second largest faction in the parliament with 19 seats.
No details emerged from the two-and-a-half hour meeting. Lapid was the first party leader with whom Netanyahu has held face-to-face talks since the election.
The premier also telephoned Jewish Home leader Naftali Bennett, whose party is the fourth largest in parliament with 12 mandates.
President Shimon Peres is to consult separately with representatives of all 12 parties next week.
He will then entrust one party leader - the only realistic possibility being Netanyahu - with the task of forming the next government, after which official negotiations can begin.
Former foreign minister and Beiteinu leader Avigdor Lieberman said the new government should focus on domestic issues rather than the Palestinian peace process, where serious rifts exist between potential coalition partners Yesh Atid and Jewish Home.
Lieberman, who will not hold a ministerial portfolio unless he is acquitted in an impending trial for fraud and breech of trust, also rejected the long-standing Palestinian demand for Israel to freeze construction in settlements in the West Bank and East Jerusalem before peace talks begin.
"We are not willing to accept any diktats on the issue of a freeze," he told Israel Radio.
"There won't be a freeze, not in Jerusalem and not in Judea and Samaria," he added, using the Biblical terms for the West Bank.
Peace talks have been moribund since September 2010 after Netanyahu refused a demand by Palestinian President Mahmoud Abbas to extend a partial 10-month settlement freeze in the West Bank.
"At the end of the day, we really want to reach here an agreement for peace," said Lieberman. "But if the other side doesn't want this, that's its problem."
He said a prospective coalition consisting only of Likud-Beteinu, Yesh Atid, and the Jewish Home could find common ground by agreeing to reduce the cost of living, and ending blanket military service exemption for ultra-Orthodox Jews, two issues which dominated the recent election campaign.
But an incoming Yesh Atid legislator told Israel Radio that reviving the peace process was one of three conditions under which his party would join a Netanyahu-led government.
"Without peace negotiations, we will not join the government," said Rabbi Shai Piron.