Israel's long-standing Prime Minister, Benjamin Netanyahu, has said he cannot form a government, handing the opportunity to his political rival.
Mr Netanyahu has been in power for the past decade, but he was unable to build a coalition with a majority after September's election ended in deadlock.
His rival Benny Gantz of the Blue and White party will now be invited to attempt to form a government.
Mr Netanyahu's attempts to bring Mr Gantz's party into government failed.
Announcing the decision to abandon his efforts, Mr Netanyahu stressed that he had tried repeatedly to form a majority coalition but had been rebuffed.
"I have made all efforts to bring Benny Gantz to the negotiating table, all efforts to form a broad national unity government, all efforts to prevent another election. Unfortunately, time after time, he simply refused," he said.
Israel's President, Reuven Rivlin, said he would give Mr Gantz 28 days to carry out the same negotiations.
Israeli Arab lawmakers pledged their backing, but Mr Gantz - who leads a centre-right alliance - remains more than a dozen seats short of the 61 seats he would need for a majority in the 120-seat parliament.
Statement from @Kachollavan19 - “The time for spin is over and it‘s now time for action. Blue and White is determined to form the liberal unity government, led by Benny Gantz, that the people of Israel voted for a month ago.”— Blue and White (@YeshAtidEng) October 21, 2019
President Rivlin said he would try to avoid calling another election in a country that had already held two this year. If Mr Gantz also fails, parliament could put forward a third candidate in a final bid to avoid another poll.
September's poll saw Mr Netanyahu's Likud party win 32 seats and Mr Gantz's Blue and White party 33. The president initially selected Mr Netanyahu as the candidate with the best chance of successfully forming a coalition.
Reacting to Mr Netanyahu's message, Blue and White said: "The time for spin is over and it's now time for action."
Mr Rivlin has suggested the two main parties form a national unity government. That arrangement could see Mr Gantz as de facto prime minister, while Mr Netanyahu holds onto the position in name only.
Many in Israel believe a third election may be the only way to break the deadlock.
Mr Gantz is a former head of the Israeli military, and served in that role while Mr Netanyahu was prime minster. He was propelled to political leadership after forming his party in February, saying that the country had "lost its way".
Mr Netanyahu has far more frontline political experience, but is facing his own battle over corruption.
While trying to negotiate his coalition in October, he also attended hearings with the attorney general, who will decide whether or not to charge Mr Netanyahu with bribery, fraud, and breach of trust in three cases. Mr Netanyahu has denied any wrongdoing.