This study proposes a local bias field and difference estimation (LBDE) model for medical image segmentation and bias field correction. Firstly, the LBDE model uses a linear combination of a given set of smooth orthogonal basis functions, which is called Chebyshev polynomial, to estimate the bias field. Then, a clustering criterion function is defined by considering the difference between the measured image and approximated image in a small region. By applying this difference in the local region, the LBDE model can obtain accurate segmentation results and estimation of the bias field. Finally, the energy functional is incorporated into a level set formulation with a regularisation term, and it is minimised via the level set evolution process. The LBDE model first appears as a two-phase model and then extends to the multi-phase one. Extensive experiments on medical images demonstrate that the LBDE model achieves more precise segmentation results in terms of Jaccard similarity and dice similarity coefficient than the comparative models. Therefore the proposed model can increase the segmentation accuracy and robustness to noise. © 2019 Institution of Engineering and Technology. All rights reserved.