Israel's PM Benjamin Netanyahu and Israel's former armed forces chief Major-General Benny Gantz speak during the opening ceremony of the Maccabiah Games in Jerusalem. Gantz is accusing Netanyahu of political spin after Netanyahu called for a meeting in order to form a national unity government. File photo: REUTERS.

Tel Aviv - The main challenger to Israeli Prime Minister Benjamin Netanyahu accused him of political spin on Thursday after Netanyahu called for a meeting in order to form a national unity government.

After a second election this year produced no decisive winner, neither candidate appears able to form a coalition and the focus has turned to the option of a government with the two biggest parties: Netanyahu's Likud and Gantz's Blue and White.

"In order to make a unity government you don't come with spin and blocs," Gantz said in a statement to the press in Tel Aviv.

"I intend to form a broad and liberal unity government, under my leadership," Gantz added.

Netanyahu responded saying: "I was surprised and disappointed that at this time Benny Gantz still refuses to respond to my call to meet."

One factor that would complicate building such a government, however, is that Likud and the other right-wing and religious parties backing Netanyahu have signed an agreement that they will not enter a coalition without each other.

Yair Lapid, the centrist Blue and White's second-in-command, accused Netanyahu of trying to drag the country to a third election, charging that this was the aim of the agreement with his bloc.

"If Netanyahu moves aside, we'll have a unity government," Lapid said.

"A government of all those who believe we need civil marriage, cancelling the mini-market law, public transport on Shabbat," he said in reference to issues pertaining to religion and state. "Without indictments and without corruption," Lapid added.

Likud members have publicly said that there is no possibility of replacing Netanyahu as their leader.

While Netanyahu hinted that he could be willing to share the premiership in a rotation, Blue and White has repeatedly said it will not sit in a government led by Netanyahu - who faces indictments over corruption charges, subject to a hearing which is set to be held in two weeks time.

"During the elections, I called for the establishment of a right-wing government. But unfortunately the election results show that this is not possible," Netanyahu said earlier.

There "is no choice" but to form a unity government, he said.

Netanyahu said that he was against going to a third election.

Naftali Bennet of the far-right Yamina party tweeted that Gantz should "immediately answer Prime Minister Netanyahu's call to meet, and stop with this silly boycott."

Speaking at at memorial ceremony for the late president Shimon Peres, President Reuven Rivlin lauded Netanyahu's call for a unity government and said he will do everything he can to prevent another election.

He added, however, that the main responsibility for this lies with the elected officials, and especially with Netanyahu and Gantz - who were also at the ceremony.

"Our current situation, which has gone on for a long time, with a transition government, grievously limits the ability of the government to act and to serve the citizens of Israel, and our ability to face the political, security and economic challenges we face," Rivlin added.

Israeli daily Haaretz reported Thursday morning that with 97% of the votes counted, Blue and White had a slight lead with 33 out of 120 Knesset seats, and Likud was behind with 31 seats. The report also said that the centre-left bloc had 57 seats and the right-wing and religious bloc had 55.

Avigdor Lieberman's right-wing Yisrael Beiteinu party had the remaining 8 seats. He is not included in either bloc as it is unclear whom he will recommend to the president for premier.

This was the second election held in Israel in just over five months, after Netanyahu failed to form a coalition following his victory in the April election.

Lieberman at the time refused to join his government over disagreements with the ultra-Orthodox parties.

dpa