The European Union (EU) on Wednesday urged the future new government of Israel to honor peace obligations taken by the country, and refrain from measures which will make impossible a two-state solution to the Israeli-Palestinian conflict.

"It (the EU) looks forward to working with the new Israeli administration to achieve the most important goal of all -- a peaceful resolution of the Israeli-Palestinian conflict. We hope that the new Israeli government will honor the obligations taken by Israel under the Roadmap and at Annapolis and refrain from measures rendering a two-state solution impossible," said the EU in a statement issued by its Czech presidency congratulating the winners of Tuesday's Israeli general elections.

The EU encouraged the incoming Israeli government to pursue all efforts leading toward the creation of an independent, democratic, contiguous and viable Palestinian State living side by side with Israel in peace and security, said the statement.

The EU also promised to offer all its support in the Israeli-Palestinian peace process and to promote security and peace for Israelis and Palestinians.

With nearly all ballots counted on Wednesday, Israeli Foreign Minister Tzipi Livni's centrist Kadima party, which secured 28 seats out of the total 120 seats of the Knesset (parliament), held an extremely narrow lead over Benjamin Netanyahu's center-right Likud party, which gained 27 seats.

Both Livni and Netanyahu claimed victory on Wednesday morning following the elections, but it is now up to Israeli President Shimon Peres to task one of the candidates with forming a new government, a process analysts said could take up to two months.

Netanyahu's chances of consolidating a right-wing coalition appear stronger than Livni's coalition building options. The right-wing bloc carried 65 seats compared to only 55 for the center-left bloc.

Given Livni's poor coalition options, she indicated Kadima and Likud could join forces and even suggested a rotating coalition power whereby both she and Netanyahu would enjoy a period of premiership. However, Likud members have shot down the possibility of rotation.