Terrestrial laser scanning is a promising technique for automatic measurements of tree stems. The objectives of the study were (1) to develop and validate a new method for the detection, classification and measurements of tree stems and canopies using the Hough transformation and the RANSAC algorithm and (2) assess the influence of distance to the scanner on the measurement accuracy. Tree detection and stem diameter estimates were validated for 16 circular plots with 20 m radius. The three dominating tree species were Norway spruce (Picea abies L. Karst.), Scots pine (Pinus sylvestris L.) and birch (Betula spp.). The proportion of detected trees decreased as the distance to the scanner increased and followed the trend of decreasing visible area. Within 10 m from the scanner, the proportion of detected trees was 87% on average for the plots and the diameter at breast height was estimated with a relative root-mean-square-error (RMSE) of 14%. The most accurate diameter measurements were obtained for pine, which had a RMSE of 7% for all the full 20 m radius plots. The RANSAC algorithm reduced noise and made it possible to obtain reliable estimates.