Question

From outer space, the earth looks blue because its two-third surface is covered with water thats why it is also called the blue planet

Answer 1

Yes the above mentioned is right but the most accurate answer is

(As we know that light is made up of 7 colours)

Therefore,

Where the light enters Earth's atmosphere it starts breaking and as blue light have lowest wavelength it get refracted most than other colours in atmosphere.

As a result the blue colour get spreed (absorbed) in every transparent object such as clouds and water and atmosphere due to which while observing from space we see earth as a blue planet.

hope it helps...