list of his Likud faction and the ultranationalist Israel Beitenu party retaining a lead in the polls ahead of the January 22 vote.
But the list, announced last October, has seen that lead gradually eaten away, with the national religious Jewish Home faction in particular chipping away at its constituency.
That looks likely to leave Netanyahu less room to manoeuvre when it comes to forming his next government.
A poll published by the Haaretz daily on Wednesday showed the Likud-Beitenu list expected to win 34 of the Knesset's 120 seats, down one seat from a December 25 poll, and a loss of nine projected seats since the list was first announced.
At that time, the parties expected to garner at least the 43 seats they currently hold -- Likud's 28 and Israel Beitenu's 15.
That would have been enough for a commanding majority in the Knesset and a solid basis for a stable government, which is something of a rarity in Israel, where a profusion of parties often leads to fractious coalitions.
That scenario seems increasingly unlikely, with polls projecting Jewish Home, under the guidance of its charismatic new leader Naftali Bennett, will take at least 14 seats in a stunning turnaround for a faction that currently holds just three seats.
The party is even considered a real contender to become the Knesset's second strongest player, overtaking the Labour party which is just clinging on to that title for now with 16 projected seats.
Israeli commentators say the Likud-Beitenu list has been the victim of poor prognostication, with Erel Segal, writing in the Maariv daily, laying the blame on consultant and Netanyahu advisor Arthur Finkelstein, who reportedly encouraged Likud and Israel Beitenu to join forces.
"He spoke about 45 seats going to the united party. He was wrong," Segal wrote. "And barring the emergence of results that are dramatically different in the actual elections, taking his advice will prove to have been a losing bet."
Segal pointed out that Netanyahu also appeared to have boosted Jewish Home, by attacking Bennett for comments he made suggesting he would refuse military orders to evacuate Jewish settlements.
Despite the fading fortunes of the Likud-Beitenu list, the rightwing bloc of parties is still expected to win around 67 seats in the vote.
But the relative success of Jewish Home could force Netanyahu to make concessions on cabinet posts that he had hoped to avoid with an overwhelming showing for his joint list.
"If current polls turn out to be an accurate gauge... Netanyahu will be subjected to blackmail in the coalition negotiations," Haaretz commentator Yossi Vertner wrote.
"He would love to leave Bennett in the opposition. That is not likely to happen."
One alternative could be for Netanyahu to form a coalition with a group of centre-left parties, including Labour, the HaTnuah faction led by former foreign minister Tzipi Livni, and the Yesh Atid party led by journalist Yair Lapid.
"The centre and left parties failed to unite before the elections, but no one knows what will happen after the vote," analyst Barak Ravid told military radio.
"If they form a unified parliamentary bloc, Netanyahu will have to negotiate with them."