Interim Prime Minister Ehud Olmert received formal approval today to form a government.
"I have the honour to announce that I have decided to ask member of parliament Ehud Olmert to form the government," President Moshe Katsav said at a ceremony with the Kadima party leader.
Mr Olmert, whose centrist party came first in last week's election with 29 seats in the 120-member parliament, will have up to 42 days to put together a governing coalition.
"I hope to form a government, which will have the broadest possible support, as quickly as possible," Mr Olmert said, accepting the nomination.
He has pledged it would set Israel's permanent borders within four years with or without Palestinian agreement.
The centre-left Labour Party led by former trade union chief Amir Peretz has already agreed to a political partnership with Kadima. Kadima will now try to woo a smattering of smaller parties and set government guidelines.
Mr Olmert has proposed removing Jewish settlers from swathes of the occupied West Bank in the continued absence of peace talks with the Palestinians. At the ceremony, he promised to make "a serious and genuine attempt" to revive peacemaking.
But he reiterated he wanted to reach "an understanding" with the United States and other countries on working "towards the fixing of the permanent border lines even without an agreement".
Under Mr Olmert's "convergence plan", Israel would keep major settlement blocs and trace its final frontier by 2010 along a barrier it is building in the West Bank, where 240,000 Israelis live among 2.4 million Palestinians.
Palestinians condemn such a move, saying it would annex land and deny the viable state they seek in the West Bank and Gaza Strip, which Israel captured in the 1967 Middle East war.