Cannot connect to the database because: No such file or directory

Today, I just tried to install a sample CodeIgniter project in  LAMPP (Ubuntu) machine. I received a following error message in browser, when I try to browse the application.

Message shows some how I am not able to connect to database. I checked the configuration at /opt/lampp/htdocs/doasoil/core/application/config/database.php (path will be different in your case) and everything seems OK to me.
So in order debug the database connection I just added following script at the end of /opt/lampp/htdocs/doasoil/core/application/config/database.php file.

print_r($db['default']);
  
  echo 'Connecting to database: ' .$db['default']['database'];
  $dbh=mysql_connect
  (
    $db['default']['hostname'],
    $db['default']['username'],
    $db['default']['password'])
    or die('Cannot connect to the database because: ' . mysql_error());
    mysql_select_db ($db['default']['database']);

   echo 'Connected OK:'  ;
   die( 'file: ' .__FILE__ . ' Line: ' .__LINE__); 

At this time I received the following debug message in browser.

Message: mysql_connect() shows at line 92 of database.php there is some problem. It is not able to find the directory. So I changed,

$db['default']['hostname'] = 'localhost';

as

$db['default']['hostname'] = '127.0.0.1';

which fix the problem.