Benny Gantz, the main challenger to Israeli Prime Minister Benjamin Netanyahu, conceded defeat on Wednesday in the country's election as results showed the premier was on track for victory.

"We respect the decision of the people," Gantz told journalists, acknowledging his centrist Blue and White alliance had failed to unseat Netanyahu in Tuesday's poll.

The results from Tuesday's vote came despite corruption allegations against the 69-year-old premier and placed him on a path to become Israel's longest-serving prime minister later this year.

His close ally President Donald Trump, who has swung US policy sharply in Israel's favour and openly backed Netanyahu, said the prime minister's victory gives the White House's long-awaited peace plan a "better chance".

Israel's Blue and White party leaders are conceding defeat in Israel's election, saying they will work against Netanyahu from the opposition.

Yair Lapid, the party's number 2 figure, told a press conference on Wednesday that though his party "did not win in this round, I respect the voters". He said his party will "embitter" Netanyahu's life from the opposition.

The Blue and White party, headed by former army chief of staff Gantz, drew even with Netanyahu's Likud party, but the incumbent prime minister is poised to form a government with his larger bloc of religious and nationalist allies.

Gantz says his party has "founded a true alternative rule to Netanyahu".