Scanning tunneling microscopy and X-ray photoelectron spectroscopy have been utilized to probe the growth kinetics, phenomenon of nucleation and segregation of Indium nano-islands on atomically clean stepped Si (113) 3x2 surface. Kinetically controlled growth of few monolayers (2.5 ML) of Indium (In) atoms at room temperature leads the formation of two dimensional (2D) nanoclusters on Si (113) surface. The thermal stability of these In nanoclusters was investigated by residual thermal desorption experiments where the In adsorbed system was annealed at different temperatures (100-600°C). It is found that, the size and density of the In nanoclusters on Si surface were influenced by the annealing temperature. In particular, on annealing the In/Si (113) system at 300°C, 2D nanoclusters were converted into a metastable state of 3D nanoclusters. Competition between layering and nano-clustering has been observed twice during the entire thermal annealing process and discussed in detail. The size tunability of these metal nanoclusters on silicon surfaces could be utilized for the fabrication of next generation nanoscale devices.