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One of the most challenging and critical problem in Wireless Sensor Networks (WSNs) is to reduce energy consumption to prolong network life. Clustering is a popular topology control method for routing data through multi-hop communication. It can improve life time of a WSN as well as its scalability. In this paper, we present a distributed clustering and routing algorithm for WSN called CEBCRA (Cost-based Energy Balanced Clustering and Routing Algorithm). The algorithm comprises of three phases, namely cluster head selection, cluster setup and data routing. The CHs are selected in distributed manner based on residual energy and the neighbour cardinality. In the setup phase, each non-CH sensor node joins a CH within its communication range based on the cost value of the CHs. In data routing phase, CEBCRA first uses single hop communication within each cluster and then perform multi-hop communication between the clusters. For inter-cluster routing, a CH measures the cost of each path from itself towards base station while selecting other CH as a relay node for data forwarding on those paths. The experimental results show the efficiency of the proposed algorithm in terms of energy consumption and number of live sensor nodes. The results are compared with two existing techniques to show the efficacy of the algorithm.