Confocal imaging is an emerging technique for the measurement of surface topography in inspection. The authors present a system designed for fast acquisition and processing of confocal images, which consists of an optical front end using tilted confocal scanning, and an image processing module. The function of the image processing module is to improve signal resolution, perform smoothing and detect surfaces in the incoming signal. The input signal is first deconvolved in order to improve the depth resolution, and then processed to identify significant peaks. These peaks represent the position of different surfaces in the object being inspected. These peak locations are smoothed using a cluster based smoothing scheme to combat noise. For semi-transparent materials, the authors system is capable of detecting up to two surfaces at a given location.