As Benjamin Netanyahu weighs up options for a new right-wing coalition, Western governments have cranked up the pressure on the Israeli premier over his controversial campaign pledge ruling out a Palestinian state.
Both the European Union and the United States gave a cool reception to Netanyahu's upset victory in Tuesday's election.
They expressed concern that his lurch to the right during the hard-fought campaign could prove an insurmountable obstacle to any resumption of peace talks.
Palestinian president Mahmud Abbas said a two-state solution to the Middle East conflict would be impossible with a new government led by Netanyahu.
In a last-ditch appeal to Israel's far right just hours before polls opened, the incumbent ruled out the establishment of a Palestinian state and pledged to build thousands of new homes for Jewish settlers in annexed Arab east Jerusalem.
While it may have secured him a third consecutive term, it has left him deeply isolated internationally and has done further damage to his already frosty relations with US President Barack Obama.
Washington brokered nine months of negotiations between Netanyahu's last government and the Palestinians that were predicated on a two-state solution and accused the Israeli premier of helping bring about their collapse.
The White House said it continued to see a two-state solution as "the best way" to resolve the Middle East conflict and warned it was reviewing its policy on the diplomatic stalemate between Israel and the Palestinians.
"Based on Prime Minister Netanyahu's comments, the United States will re-evaluate our position and the path forward in the situation," it said.
The statement did not elaborate on the options under consideration but speculation swirled about whether the Obama administration might cease using the US veto at the UN Security Council to shield Israel from the Palestinians' efforts for statehood.
The Palestinian leader said that it was clear from Netanyahu's campaign pledges that there was no prospect of a negotiated settlement with him as prime minister.
Abbas said the Palestinians would continue to "demand international legitimacy," in reference to their attempts to achieve statehood through the United Nations and other international bodies.
"It is our right to go to anywhere in the world to achieve international legitimacy," he said.
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