Israel moved closer towards holding its third election in less than a year on Wednesday, after Prime Minister Benjamin Netanyahu's main challenger failed to form a government.

Benny Gantz's announcement that he would not meet a midnight deadline following Netanyahu's own failure to put together a coalition in October deepened political deadlock at a time of mounting security and economic concerns.

A 21-day period will now begin in which Israeli lawmakers can nominate any one of the Knesset's 120 lawmakers to try and establish a coalition where others have failed.

If this also proves unsuccessful, an election will be triggered within 90 days, raising the prospect for a weary electorate of going back to the polls after inconclusive votes in April and September.

On Wednesday, Gantz announced that he had failed to form a government by the midnight deadline.

"In the past 28 days, I have left no stone unturned, irrespective of how small, in my attempt to form a government that would bring to the State of Israel leadership with integrity, morality and values," he said on Wednesday night.

The leader of the centrist Blue and White party and Israel's former military chief said he had informed President Reuven Rivlin of his decision and returned the mandate to form a government that the president had given him last month.

He blamed Netanyahu for "entrenching himself in an interim government for over a year" to avoid indictment.

He said Netanyahu had refused to drop the demand for parliamentary immunity from a series of corruption investigations in which he is a main suspect.

"This is a dangerous and unprecedented attempt in the history of Israel to prevent the people of Israel from having the government they have voted for," Gantz said, referring to the September 17 elections in which his party won the largest number of votes.

For Netanyahu, not securing a fifth term as prime minister has legal implications; it may increase his vulnerability to possible indictment on corruption charges.

Israel's attorney-general is due to announce soon whether or not the conservative Likud party leader – who is Israel's longest-serving prime minister – will be formally charged following long running police investigations.

Netanyahu denies all wrongdoing, accusing his opponents of a witch hunt. Under Israeli law a serving prime minister does not have to step down if charged.

(With input from Xinhua and Reuters)

(Cover: A banner depicting Israeli Prime Minister Benjamin Netanyahu outside the Justice Ministry as pre-trial hearings in corruption cases against Netanyahu continue, Jerusalem, Israel, October 3, 2019. /Reuters Photo)