JERUSALEM (AP) – Israeli TV stations predicted that acting Prime Minister Ehud Olmert’s Kadima Party would win Tuesday’s election by a smaller margin than expected, but it still could form a coalition to carry out his plan of drawing Israel’s final borders.

Olmert has said his party, founded by Ariel Sharon before his debilitating stroke, only would govern with parties supporting his plan to separate from the Palestinians and establish Israel’s borders by 2010. He has not said which ones he prefers as partners in a center-left coalition.

In Gaza, Hamas said it would resist Olmert’s border plan.

A spokesman for Palestinian President Mahmoud Abbas said the PLO is ready to negotiate immediately the implementation of the U.S.-backed “road map” peace plan with the next Israeli government.

Elections officials said voter turnout was 63.2 percent, the lowest in the nation’s history. A low turnout was seen as hurting Kadima and favoring small, ideological parties. Final results were expected Wednesday.

The Labor Party, which favors a negotiated settlement with the Arabs, came in a strong second.

The hard-line Likud, which dominated Israeli politics for three decades and opposes Olmert’s plan to withdraw from much of the West Bank, came in a distant fourth, according to polls broadcast immediately after voting ended.

The surprise of the evening was the strong showing by two parties that had been considered marginal.

The hard-line Israel Beitenu Party of Avigdor Lieberman, who advocates redrawing Israel’s borders to exclude Israeli Arabs, was expected to win 12-14 seats, making it the third-largest party in parliament. Opinion polls predicted Lieberman’s party would win 10-15 seats.

Lieberman was the chief aide to former Prime Minister Benjamin Netanyahu. His party, which would like to redraw Israel’s borders to include more Jews and exclude more Arabs, has two representatives in the current Knesset.

The Pensioners’ Party, not represented in the current parliament, was expected to win 6-8 seats, and Kadima officials said the party was a natural coalition partner.

According to the TV projections, Kadima would win 29-32 seats in the 120-member parliament, Labor 20-22 seats and Likud 11-12 seats. Recent opinion polls showed Kadima winning 34 seats.

Analysts had said it would be a clear victory for Kadima if it won more than 35 seats.

The vote was billed as a historic referendum on Olmert’s vision of the future of the West Bank after 39 years of military occupation.

Under Olmert’s plan, Israel’s partially completed West Bank separation barrier, expected to swallow about 8 percent of the area, would become the new border within four years, with some alterations.

Settlement blocs on the “Israeli” side of the barrier would be beefed up, while tens of thousands of settlers living on the other side would be uprooted.

“We will determine the line of the security fence, and we will make sure that no Jewish settlements will be left on the other side of the fence. Drawing the final borders is our obligation as leaders and as a society,” Olmert wrote Tuesday in an op-ed piece published in the Hebrew-language Yediot Ahronot daily newspaper.

Hamas spokesman Sami Abu Zuhri said the Islamic militant group would resist Olmert’s plan.

“We view this plan as a very dangerous one because it represents a real liquidation of the Palestinian cause,” he said.

The vote came the same day Hamas’ 25-member Cabinet was approved by the new Palestinian parliament. Incoming Palestinian Prime Minister Ismail Haniyeh said he opposes Olmert’s border plan, but he toned down Hamas’ militant ideology, saying he was not interested in perpetuating the cycle of violence with Israel.

Olmert’s idea of unilateral action gained support after Hamas militants, who do not recognize Israel’s right to exist, won January parliamentary elections.

Abbas, attending the Arab Summit in Sudan, appealed to voters to back candidates who support a peace deal.

“We hope that the Israeli voters will direct their vote to peace, for parliament members who are looking for peace, who want peace, because there is no future for us and for them, there is no security for us and for them, without peace,” he told The Associated Press.

In Israel’s electoral system, the leader of the largest party is asked first to try to form a ruling coalition.

Because Olmert has not won an outright majority, he will need allies to govern. The exit polls suggested a core alliance with Labor, the leftist Meretz and possibly the pensioners.

Israel began the “disengagement” process last summer with its withdrawal from the Gaza Strip, but Tuesday’s vote marked the first time the leading candidate has laid out a concrete vision for the future of the West Bank, captured in the 1967 Mideast war. The area is home to 2.5 million Palestinians.

“This is perhaps the most important election in all of Israel’s life,” said Mordechai Aviv, 76, of Jerusalem. “We are going to separate between us and the Arabs. This is very important for us to continue having a Jewish state.”

Election Day is a state holiday in Israel, where many of the 8,276 polling stations serving 4.5 million eligible voters are set up in schools.

Rafi Friedman of the central Israeli town of Kochav Yair was first to vote at his polling station.

“Voting is not just a right. It’s a duty,” he said before dashing off to the airport.

Security was extremely tight, with some 22,000 police and border police patrolling Israel’s frontier with the West Bank, particularly around Jerusalem. The military had sealed off the West Bank and Gaza two weeks earlier, barring all Palestinians to prevent possible militant attacks.

On Tuesday morning, Palestinian militants for the first time fired a longer-range Russian-made Katyusha rocket from Gaza into Israel, and security officials said the precedent was very worrisome.

Katyushas can reach larger Israeli towns near Gaza, and are far deadlier than the homemade Qassam rockets militants have fired in the last five years of Israeli-Palestinian fighting. The rocket fell in an open area and caused no injuries.