Set file permissions for magento installation

Files & directories that must be writeable are:

• - file: magento/var/.htaccess
• - directory: magento/app/etc
• - directory: magento/var
• - all the directories under: magento/media

If you are using FTP, set the permissions of each to 777 or check read/write/execute for owner, user and group. If you are using SSH, use the following commands:

chmod o+w var var/.htaccess app/etc
chmod -R o+w media

But actually it should be

chmod o+w -R var var/.htaccess app/etc

The contents in the 'var' directory must be writable as well, otherwise you get this error.