Failed to determine PHP installation on server <localhost>

I get the following error when trying to create a new project from and existing source.

"Failed to determine PHP installation on server localhost"

1) I started PHPStorm and from the menu selected File - > New Project from Existing Files.

2) In the dialogbox prompt I selected "Webserver is installed locally, source files are located under its document root" and clicked the next button.

3) In the "Choose Project Directory" screen I selected the path to create the project in and clicked next.

4) In the "Specify the local server" screen, I selected "Add new local server" and clicked next.

5) In the "Add Local Server" screen, I input "localhost" in the "Name:" input field and http://localhost value for "Web server root URL:" field and clicked next.

6) In the "Specify Web Path" screen, I input the project directory name. The "Project URL:" showed the value http://localhost/<projectdirname> . I also enable "Review PHP settings"

7) When I click next, the subesquent screen I get the error  "Failed to determine PHP installation on server localhost".

When I type in the URL http://localhost/<project name> it works.

Any help is appreciated.

Thanks

Ashish Anand