(Adds Livni quotes, paragraphs 9-10)

JERUSALEM, Feb 17 (Reuters) - Israeli President Shimon Peres will hold talks with party leaders on Wednesday before deciding whom he should ask to form a new government after an indecisive election, a statement released on Tuesday said.

Foreign Minister Tzipi Livni, head of the centrist Kadima party, and right-wing leader Benjamin Netanyahu have each staked a claim to be prime minister since the Feb. 10 vote.

Kadima won 28 seats in the 120-member parliament to 27 for Netanyahu's Likud party. Despite Livni's edge, Netanyahu appears to command the largest bloc of supporters.

Under Israeli law, Peres names the candidate for prime minister. He will begin consultations with members of the dozen parties elected to parliament after receiving the official results on Wednesday evening, his office said.

Peres will first meet members of Kadima and Likud, and consult with other parties on Thursday and Friday, the statement said.

The law gives Peres until Feb. 25 to name the lawmaker who will become prime minister if he or she manages to build a ruling coalition. The candidate has 42 days to form a government and must then win parliament's approval.

Past presidents have mostly chosen the leader of the largest party. The electoral stalemate means Livni and Netanyahu, a former prime minister, may choose to forge a coalition, politicians in both their parties have said.

Livni and her allies have said they would not join a government headed by Netanyahu. Netanyahu insists he should be prime minister and that he could form a government without Kadima and with the support of a rightist bloc of 65 lawmakers.

"Our test did not end last week, our test starts today," Livni told Kadima party faithful at an election victory celebration in Tel Aviv on Tuesday night.

"These elections showed that what happened at the elections was not just political, (we are) a new social movement that has been established and has swept this nation...it will continue to engulf the entire country wherever we will be," she said.

Left-wing and centrist lawmakers who could be Livni's natural allies have won 55 seats and not all have vowed to support her.

Peres's decision could depend on whom the largest far-right party, Yisrael Beitenu, with 15 seats, recommends as prime minister. That party has not said which candidate it will support and has been holding talks with both. (Writing by Allyn Fisher-Ilan; Editing by Ori Lewis and Charles Dick)

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