The most recent news is that
- Kadima has been talking with Yisrael Beitenu and therfore the other praties on the left are refusing to talk with Kadima about a coalition.
- Likud has approached some of the religious parties on the right to secure a large enough block to convince President Shimon Peres to allow Likud to try and form the government by finding more parties to join their block. They do not have an agreement with Yisrael Beitenu at this point.
Here is an interesting article from from a few days ago, written by Caroline Glick, on the choices available to Likud.
Column One: Enter the Netanyahu gov't | Columnists | Jerusalem Post