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Service discovery is vital in ubiquitous applications, where a large number of devices and software components collaborate unobtrusively and provide numerous services without user intervention. Existing service discovery schemes use a service matching process in order to offer services of interest to the users. Potentially, the context information of the users and surrounding environment can be used to improve the quality of service matching. To make use of context information in service matching, a service discovery technique needs to address certain challenges. Firstly, it is required that the context information shall have unambiguous representation. Secondly, the devices in the environment shall be able to disseminate high level and low level context information seamlessly in the different networks. And thirdly, dynamic nature of the context information be taken into account. We propose a C-IOB(Context-Information, Observation and Belief) based service discovery model which deals with the above challenges by processing the context information and by formulating the beliefs based on the observations. With these formulated beliefs the required services will be provided to the users. The method has been tested with a typical ubiquitous museum guide application over different cases. The simulation results are time efficient and quite encouraging.