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A reliable and fast algorithm is needed to implement a License Plate Recognition in a real life vehicle traffic environment. This paper proposed a hybrid algorithm of interconnected image segmentation and contour extraction to locate and identify license plate for a given image. A pre-processed image will be segmented in several small images based on contour detection algorithm. The location of each segmented image’s centre was then plotted into a Euclidean plane to get their relative positions. The distance and position of the segments evaluated in search of interconnected segments. This set of segments then will be fed into a cost function that determines its level of relevancy as a plate number. Set with highest score went through character recognition process to extract the meaning. Proposed work was tested in Indonesian license plate system with a high rate of correctness and average processing …