Computed Tomography (CT) images are widely used for diagnosis of liver diseases and volume measurement for liver surgery and transplantation. Segmentation of liver and lesion is regarded as a major primary step in computer-aided diagnosis of liver diseases. Lesion alone cannot be segmented automatically from the abdominal CT image since there are tissues external to the liver with similar intensity to the lesions. Therefore, it is necessary to segment the liver first so that lesion can then be segmented accurately from it. In this paper, an approach for automatic and effective segmentation of liver and lesion from CT images needed for computer-aided diagnosis of liver is proposed. The method uses confidence connected region growing facilitated by preprocessing and postprocessing functions for automatic segmentation of liver and Alternative Fuzzy C-Means clustering for lesion segmentation. The algorithm is quantitatively evaluated by comparing automatic segmentation results to the manual segmentation results based on volume measurement error, figure of merit, spatial overlap, false positive error, false negative error, and visual overlap.