Benjamin Netanyahu has overwhelmingly beaten his right-wing rival in the Likud Party primaries.
As expected, Moshe Feiglin, leader of the "Jewish Leadership" faction of Likud, picked up just a quarter of the votes. The Israeli Prime Minister now has a strong mandate from his party to go forward to the national elections, due by next year.
However Mr Netanyahu's victory came as his government approved housing subsidies for settlers, a move designed to attract support from hard-liners in the party.
Less than half of the 130,000 party members in Israel turned out to vote, and even that was a rise on the 2007 primaries.
Mr Netanyahu promised that Likud would "continue leading the country responsibly.
"We face great challenges that no other country in the world faces and I believe we will overcome them together in the way of the Likud," he said after his victory was announced.
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