Israeli leader Benjamin Netanyahu suffered a bruising in parliamentary elections Tuesday but retained his position as head of the country’s largest party and appeared on course for a third term as prime minster, according to exit polls published on Israel’s three main television news channels.

Netanyahu’s right-wing Likud Beiteinu captured 31 seats in the 120-member parliament, according to the polls, 11 fewer than the 42 seats the party currently controls. Though pundits had predicted a decline for the party, the results were worse than even the most pessimistic projections.

But—and this is the good news for Netanyahu—many of those lost votes went to other right-wing and religious parties, including an ultra-hawkish one headed by political newcomer Naftali Bennett. If the exit polls prove accurate, the combined strength of those parties should still be enough to provide Netanyahu with at least a thin majority in parliament.

The election, which Netanyahu called just three months ago, held other surprises. The centrist Yesh Atid party, headed by another political neophyte, Yair Lapid, will likely be the second largest faction in parliament with 18 or 19 seats, according to the exit polls. Labor, a center-left party that stressed in its campaign the large gaps between Israel’s rich and poor, rose to 17 seats.

In a post on his Facebook page about an hour after polls closed, Netanyahu signaled that he heard the message and suggested that he would try to include at least one of the center-left parties as a partner in his coalition.

“According to the polls, it is clear that the citizens of Israel want me to continue to serve as prime minister and to form as large a government as possible,” he wrote.

“The apparent results are a wonderful chance for many changes that will benefit all of Israel’s citizens. The elections are now behind us, and many complex challenges are before us,” he added.

Labor leader Shelly Yechimovich ruled out joining with Netanyahu in a speech delivered after the exit poll results were announced. Lapid has signaled he would consider an offer from Netanyahu, but it wasn’t immediately clear whether he would be compatible with Netanyahu’s other potential partners—or with Netanyahu himself.

A former newscaster and the son of a politician, Lapid said during the campaign that he would only join a government that actively promotes peacemaking with the Palestinians. And he lobbied against military draft exemptions for the ultra-Orthodox, putting him at odds with Netanyahu’s ultra-Orthodox coalition partners.

Peace activists described the results as a pleasant surprise, but they were careful to note that Netanyahu would probably still be in a position to expand settlements in the West Bank and rule out significant compromises with the Palestinians.

“The next Israeli government won't be a ‘peace’ government, but there will be more opportunities to put the brakes on rampant self-destructive policies,” tweeted Daniel Seidemann, who heads the peace group Terrestrial Jerusalem.

The voter turnout was nearly 68 percent, slightly higher than in 2009. Avraham Diskin, a political scientist and the Central Election Committee’s chief statistician, said Likud-Beiteinu’s weak showing resulted in part from a low turnout among immigrants from the former Soviet Union—one of the party’s core constituencies.

Several analysts predicted that Netanyahu’s new coalition, whether narrow or broad, would be inherently unstable and might well collapse within a year.

Netanyahu, who is 63, first served as prime minister in the 1990s. After a break from politics, he worked his way back to the premiership in 2009, presiding over a coalition of mainly right-wing and religious parties.

His supporters say Netanyahu kept the Israeli economy steady during a worldwide recession and brought international pressure to Iran’s nuclear program.

But in other areas, Netanyahu has been widely criticized. Jewish settlement expansion in the West Bank has surged during his term, prompting Palestinians to reject negotiations with Israel. Tensions with President Obama—over settlements and also over Netanyahu’s threat to attack Iran—have occasionally spilled out into the open, a rarity in the relationship between the two countries.

In one of the more widely quoted censures, a former Israeli security chief recently described Netanyahu as a reckless opportunist who plotted to attack Iran without the approval of his Cabinet.

“There’s no great enthusiasm for Netanyahu generally in the country, but the fact is there is no alternative credible leader,” said Shlomo Avineri, a political scientist at Jerusalem’s Hebrew University.

Avineri said Netanyahu has managed to retain support in part by nurturing the perception that the Palestinians form the main obstacle to peace.

“The economy has been stable and the security situation has been stable. Those things are very important,” he said. “The peace process has been stuck, but most Israelis blame the Palestinians for that.”