Netanyahu pledges to end Palestinian rocket attacks, as candidates focus on security.
About 20 per cent of Israelis remain undecided on who they will vote for, polling organisations say, and the leading candidates in the election are focusing their efforts on winning them over.
Netanyahu, is still favourite to become Israel's next prime minister but is losing popular support among the electorate, according to the most recent opinion polls.
His Likud party is forecast to win between 25 and 27 of the 120 seats in the Knesset, the Israeli parliament.
The centrist Kadima party led by Tzipi Livni, Israel's foreign minister, is running a close second with an expected 23 to 25 seats.
Livni said on Sunday that she would continue the US-sponsored peace process with Palestinian leaders in the occupied West Bank, a plan supported by the new Obama administration in Washington.
"I will continue down the path I laid out with my partners on the Palestinian side," she told army radio.
"I'm not prepared to be a prime minister whose hands are tied in a government without any peace process. That is an intolerable price."
Surveys of public opinion show the Israeli electorate has moved to the right with Avigdor Lieberman, a far-right leader, seeing a sudden rise in support in opinion polls published on Friday.
Yisrael Beiteinu (Israel Our Home) party is now ranked third and is predicted to get between 18 and 19 seats.
Support for Lieberman is believed to have come on the back of Israel's war in Gaza, in which more than 1,300 Palestinians died, and his rejection of peace negotiations with the Palestinians.
He has based his campaign platform on denying citizenship to Arabs deemed to be considered "disloyal" to the state of Israel.
The Labour party of Ehud Barak, Israel's defence minister, is trailing the other major parties.
If the election results match the opinion polls, it would mark the first time in Israel's history that Labour is the fourth of the main parties in the Knesset.
More than five million voters are eligible to cast ballots in Tuesday's elections.
No party is expected to win a complete parliamentary majority of 61 seats, which would mean that whichever gains the most votes will have to turn to other factions to form a coalition, giving smaller parties like Lieberman's greater influence.
The political shift to the right in Israel could put Tel Aviv at odds with Washington, observers say.
Netanyahu has said he would allow existing Jewish settlements in the West Bank to expand.
He also told a security conference earlier in the week that peace efforts should focus on bolstering the Palestinian economy, rather than establishing an independent state.
His positions are certain to be rejected by the Palestinians and much of the international community.
Barack Obama, the US president, has made promises of a fresh approach to a peace deal between Israel and the Palestinians, including "vigorously" pushing forward with the establishment of a Palestinian state.
Obama has appointed George Mitchell, a former senator who helped broker peace in Northern Ireland in 1998, as his Middle East envoy.
Mitchell is expected to pressure Israel into making concessions with the Palestinians.
Mahdi Abdul Hadi, the director of the Palestinian Society for the Study of International Affairs (PASSIA), said Mitchell could be "the sole window of hope" after the election.
"Everything will depend on what he will be able to accomplish, whatever government may be in power in Israel," she said.