Permalinks wordpress not working 404 error

I was trying to install wordpress in my local system. There was an option of Permalink settings which is used to change the url pattern of every post.

I selected the post name. But in the site the links of the posts were not working. It was giving 404 error. I have checked .htaccess. It was also okay.

I am using Ubuntu 11.10. In terminal I went to /etc/apache2/sites-available.

Edit default file in vi editor – #vi default

In the <Directory /var/www/>  AllowOverride was none None. I chenged it to  AllowOverride all.

Restarted the apache # service apache2 restart

Then checked the link in wordpress and everything was working fine. 🙂