Two different methods of Bayesian segmentation algorithm were used with different band combinations. Sequential Maximum a Posteriori (SMAP) is a Bayesian image segmentation algorithm which unlike the traditional Maximum likelihood (ML) classification attempts to improve accuracy by taking contextual information into account, rather than classifying pixels separately. Landsat 7 ETM+ data with Path/Row 186-26, dated 30 September 2000 for a mountainous terrain at the Polish - Ukrainian border is acquired. In order to study the role of thermal band with these methods, two data sets with and without the thermal band were used. Nine band combinations including ETM+ and Principal Component (PC) data were selected based on the highest value of Optimum Index Factor (OIF). Using visual and digital analysis, field observation data and auxiliary map data like CORINE land cover, 14 land cover classes are identified. Spectral signatures were derived for every land cover. Spectral signatures as well as feature space analysis were used for detailed analysis of efficiency of the reflective and thermal bands. The result shows that SMAP as the superior method can improve Kappa values compared with ML algorithm for all band combinations with on average 17%. Using all 7 bands both SMAP and ML classifications algorithm achieved the highest Kappa accuracy of 80.37 % and 64.36 % respectively. Eliminating the thermal band decreased the Kappa values by about 8% for both algorithms. The band combination including PC1, 2, 3, and 4 (PCA calculated for all 7 bands) produced the same Kappa as bands 3, 4, 5 and 6. The Kappa value for band combination 3, 4, 5 and 6 was also about 4% higher than using 6 bands without the thermal band for both algorithms. Contextual classification algorithm like SMAP can significantly improve classification results. The thermal band bears complementary information to other spectral bands and despite the lower spatial resolution improves classification accuracy.