Mr Netanyahu has been unable to form another right-wing coalition despite topping the polls in April’s election. A row over conscription of ultra-orthodox students blocked his bid to create a conservative alliance. By calling fresh Israeli elections Mr Netanyahu prevented any opposition leader having the chance to try and form a governing coalition.
The new polls will take place on September 17.
Speaking to journalists Mr Netanyahu commented: “We’ll run a sharp, clear election campaign which will bring us victory.
“We’ll win, we’ll win and the public will win.”
Fresh elections were overwhelmingly backed by the Israeli parliament, which voted by 74-45 to dissolve itself.
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In April’s election Mr Netanyahu’s Likud party won 35 out of the 120 seats in the legislature, giving him the chance to form a government.
However a row has broken out between the hard-right Yisrael Beitenu party, led by Avigdor Lieberman, and conservative religious parties.
Mr Lieberman, the former defence minister, is insisting that military draft exceptions for ultra-Orthodox Jews are amended.
The religious parties have refused this demand, preventing Mr Netanyahu from reassembling his previous right-wing coalition.
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No party has ever held a majority of seats in the Israeli parliament, so government’s are always formed as coalitions.
Mr Netanyahu is on course to become the longest serving Israeli Prime Minister in July, prior to September’s elections.
He has been in office since March 2009, when he took over from centrist Ehud Olmert.
However Mr Netanyahu also faces legal challenges in the next few months over alleged fraud and bribery.