Israeli President Shimon Peres picked Benjamin Netanyahu, leader of the hard-line Likud party, to form the country's new government Friday.
Netanyahu now has six weeks to put together a coalition government.
In national elections earlier this month, Netanyahu's party only won 27 seats of the 120-seat parliament, compared to 28 seats won by the centre-left Kadima party.
However, even though Kadima party leader Tzipi Livni won more seats, it was up to Peres to choose which leader would be the most capable to form a coalition government.
On Thursday, Netanyahu received a major boost when Avigdor Lieberman, the controversial leader of the hawkish Yisrael Beitenu, endorsed him.
Netanyahu, who served as prime minister in the 1990s, is now believed to have about 65 seats -- enough for a majority -- because of Lieberman's support.
After receiving his mandate, Netanyahu immediately called for all parties to unite.
"I call on Kadima chairwoman Tzipi Livni and Labor party chairman Ehud Barak and I say to them -- let's unite to secure the future of the State of Israel. I ask to meet with you first to discuss with you a broad national unity government for the good of the people and the state," Netanyahu said, according to Israeli daily Haaretz.
Livni has said she would not join a hard-line government and would sit in opposition "if necessary."
"I will not be able to serve as a cover for a lack of direction. I want to lead Israel in a way I believe in, to advance a peace process based on two states for two peopes," Livni said.
Mira Sucharov, an associate professor of political science at Carleton University, said it's rare that the winner of elections is not picked to form the government.
Sucharov said Livni may be betting that Netanyahu's coalition will be unstable and fall apart.
She might be "biding her time, waiting for moments of instability," Sucharov told Â鶹´«Ã½net on Friday.
If Livni doesn't form a coalition, Netanyahu's hard-line alliances will not bode well for peace talks with the Palestinians.
For U.S. President Barack Obama, who has made achieving peace in the Middle East a top priority, such a government is sure to present challenges.
Meanwhile, Peres called Friday for a government to be established as quickly as possible.
"The people of Israel need governmental and political stability so that we will be able to cope with the challenges standing before us," Peres said, according to Haaretz.
"The challenges are varied and urgent. And the public expects that following the elections, a fitting government be formed that will roll up its sleeves and perform its duties faithfully."
With files from The Associated Press
