Jerusalem: The campaigning went down to the wire, with frantic text messages and Facebook videos from Prime Minister Benjamin Netanyahu and his right-wing Likud Party attempting to rally Israelis to his cause.

"The right-wing government is in danger. Arab voters are coming out in droves to the ballot booths," Mr Netanyahu said in a Facebook message following news that voter turnout amongst Arab Israelis was much higher than in previous elections.

Israel's controversial Foreign Minister Avigdor Lieberman, who earlier this month said "disloyal" Arab Israelis should be beheaded with an axe, also reached out to voters.

"Those who wish to prevent the establishment of ISIS and al-Qaeda branches in Israel should vote for [his right-wing nationalist party] Yisrael Beitenu," he told the Haaretz newspaper.

Former Labor Party leader Shelly Yachimovich, now on the centre-left Zionist Union list, described Mr Netanyahu's comments as "horrendous".

"No Western leader would dare utter such a racist comment," she wrote on her Facebook page. "Imagine a prime minister/president in any democracy who would warn that his rule is in jeopardy because, eg, 'Black voters are coming in droves to the polling stations'."

As the election entered its final hours (polling stations close 7am AEST) the outcome of the election dubbed "Anyone but Bibi", the nickname for Mr Netanyahu, was anything but certain.

The ruling Likud Party, predicted to win 20 to 22 seats was trailing the centre-left Zionist Union, expected to take between 24 and 26 seats, with the Joint List of Arab parties predicted to win as many as 13 to 15 seats, which would make it the third-largest bloc in the 120-seat Knesset.

But as in every election since Israel's first poll in 1949, no one party or bloc is expected to win the 61 seats necessary to form government, so a long, drawn-out period of negotiation is expected to begin once the final results are confirmed on Wednesday local time.

Many voters Fairfax Media spoke to despaired that Israel may be heading from one short-lived, fractious coalition to another.

"I am so sick of King Bibi [Mr Netanyahu] and his arrogance but I do not believe that anyone has presented a good alternative," Yonatan David said in the settlement of Ramat Eshkol in East Jerusalem, which has a large ultra-Orthodox population.

"Shas [the ultra-Orthodox party] is divided, there is no one we can rely on," he said. "I voted with a bitter taste in my mouth, but I fear we will be back here in another two years time after another government fails."

In the middle-class Jerusalem neighbourhood of German Colony, voters were similarly despondent.

"I am not really optimistic today," said Ayelet Orpaz, who along with her husband voted for the left-wing Meretz party, which the latest polling indicates is struggling to reach the four-seat election threshold.

"This time I cast my vote not just for me but for him," she said, pointing to her six-month-old son in the pram in front of them.

For her family, the priorities are reaching a peace deal with Palestine and focusing on human rights and discrimination within Israeli society.

Even if the Zionist Union wins, Ms Orpaz fears nothing much will change, but, echoing many of her fellow voters, she said with a shrug: "Anything will be better than Bibi."

Mr Herzog has promised to revive peace talks with the Palestinians, repair Israel's badly damaged relations with its key ally the United States and focus on the growing wealth disparity in Israel.

But all this depends whether he is able to form a coalition and on the demands of whatever parties join him in government, and analysts say it's still possible Mr Netanyahu will be able to form a coalition even if Likud comes in second place with the voters.

Mr Netanyahu dissolved his governing coalition, which included  Yair Lapid's Yesh Atid, Naftali Bennett's Jewish Home and Tzipi Livni's HaTnuah party, in December after continuing tensions with Mr Lapid and Ms Livni. His government had lasted just under two years of a four-year term.

Cost of living issues were the top concern for 55 per cent of Israelis, while just 28 per cent nominated security as their major worry, a poll published on Friday in the newspaper Yedioth Ahronoth found.

The Central Elections Committee announced this election was costing $US59.7 million ($78.38 million) – a figure that grates on voters struggling to make ends meet in a difficult economy.

"I know of so many people who cannot make it to the end of the month with what they earn," 49-year-old Micki, who did not want his last name used, said in the East Jerusalem settlement of Pisgat Ze'ev. He voted Zionist Union, saying he was desperate for a change in leadership. "How can they keep spending this money on elections when they could be spending it policies that could help the people who are really struggling."

Two of his friends disagreed – they were sticking with Mr Netanyahu, they said, because "no one knows if we can trust Herzog if there is a security crisis".

Mr Netanyahu's scare campaign over Arab voters followed his election eve about-face on the issue of a two-state solution, in which he vowed there would never be a Palestinian state as long as he is prime minister.

Accusing the Zionist Union of laying the groundwork for a settlement freeze in the West Bank and East Jerusalem, he warned that the centre-left bloc would work with the international community to maintain Israel's borders along pre-1967 lines.

But it is not just voters expressing their distaste for a fourth-term with Mr Netanyahu as leader. An editorial in the left-leaning Haaretz encouraged its readers to vote Mr Netanyahu out of office, saying the election was an opportunity to "change the depressing direction in which Israel is headed".

Listing what it cites as key failures, the editorial says his government did not do enough to reduce the high cost of living, dismantle the monopolies and cartels or reform the education sector.

"Under Netanyahu, laws that are intolerant, anti-democratic and inciteethnic hatred have proliferated. Senseless programs to reinforce Jewish identity, chief among them the 'Jewish nation-state bill', underlined his efforts to further marginalise Israel's minorities and make them second-class citizens."

A senior columnist with Yedioth Ahronoth, Nahum Barnea, also urged a vote against the prime minister.

"Israelis are tired of Netanyahu. They're fed up with him and he with them," he wrote. "After . . . 22 years in the headlines, the magic has gone."