Step 1: Windows stack for PHP development
There are two popular bundled solutions available which comes with everything you need to run a PHP application (E.g. Apache, MySQL, PHP)
Download wampserver for windows or xampp
wamp installation should be straight forward, click through the screens and once the installation is done you should find a wampserver tools on the system tray as show in the screenshot below, you can start all the services by clicking on the last option on the menu "Put Online", once it is started type http://localhost on the browser and you should be able to see default wamp server page.
Edit php.ini file to include following entry in F:\wamp\bin\apache\apache2.2.22\bin\php.ini
This will enable xdebug which will be later used from eclipse for debugging PHP application.
xdebug.remote_enable = true
xdebug.profiler_enable = true
xdebug.profiler_enable_trigger = off
xdebug.profiler_output_name = cachegrind.out.%t.%p
xdebug.profiler_output_dir = "f:/wamp/tmp"
Step 2: Eclipse IDE for PHP development
For existing eclipse install you can install Eclipse PDT Plugin as follows, This will install PHP development perspective into the existing eclipse environment, if you don't have an existing eclipse setup you can download it from http://projects.eclipse.org/projects/tools.pdt
For existing eclipse setup you can install PDT plugin as follows.
Help -> Install New Software
Create a new PHP project, notice the directory location, this should point to www folder inside the wamp installation folder.
You can download the latest version of Magento zip from this location http://www.magentocommerce.com/download
Once the project is created import all the files from magento folder, After you import the package you may notice DLTK indexing takes long time to finish, this is a trade off.
Before we runt he application make sure PHP executable is configured to make use of php engine in WAMP installation folder, it should appear as shown in the screenshot below.
Now you can click on the index.php and launch it as shown in the screen shot below, for debugging you should select "Debug As" ->"PHP Web Application", This should bring up Magento install page with eclipse debugger view.