Lieberman's backing significantly improves Netanyahu's chances of becoming prime minister.
Lieberman pledged his support to Netanyahu ahead of his planned meeting with Shimon Peres, Israel's president.
Peres has been meeting leaders of various political parties before deciding who to invite to form Israel's next government following last week's parliamentary elections.
Al Jazeera's Jacky Rowland, reporting form Jerusalem, said Lieberman was giving his backing to Netanyahu, but with very clear conditions.
"The most important one being the Kadima party would, in some way, have to be persuaded to serve within the government led by Netanyahu." she said.
The Israeli president has until Febuary 25 to make his choice.
Peres began the task on Wednesday after receiving official results from February 10 general elections in which no party emerged with a clear majority.
Kadima party, led by foreign minister Tzipi Livni, came first with 28 seats.
Likud, led by Netanyahu, got 27 and Lieberman's Yisrael Beitenu won 15 seats.