Error:PHP is not running – LAMP/Ubuntu

Hi All,
I’m installing WordPress on my Ubuntu system but am having some trouble.

After going through all the setup for LAMP and WordPress, I am getting the following error when attempted to access /localhost/wp-admin/install.php- “Error: PHP is not running

WordPress requires that your web server is running PHP. Your server does not have PHP installed, or PHP is turned off.”

Now, I do know PHP is running on my server and I can access my MySQL database from the CLI.

Setting up a test.php in my root directory, I get the following result when checking – `PHP Version 5.4.9-4ubuntu2.2

System Linux tony-VirtualBox 3.8.0-26-generic #38-Ubuntu SMP Mon Jun 17 21:43:33 UTC 2013 x86_64
Build Date Jul 15 2013 18:03:28
Server API Apache 2.0 Handler
Virtual Directory Support disabled
Configuration File (php.ini) Path /etc/php5/apache2
Loaded Configuration File /etc/php5/apache2/php.ini
Scan this dir for additional .ini files /etc/php5/apache2/conf.d
Additional .ini files parsed /etc/php5/apache2/conf.d/10-pdo.ini, /etc/php5/apache2/conf.d/20-gd.ini
PHP API 20100412
PHP Extension 20100525
Zend Extension 220100525
Zend Extension Build API220100525,NTS
PHP Extension Build API20100525,NTS
Debug Build no
Thread Safety disabled
Zend Signal Handling disabled
Zend Memory Manager enabled
Zend Multibyte Support provided by mbstring
IPv6 Support enabled
DTrace Support disabled
Registered PHP Streams https, ftps, compress.zlib, compress.bzip2, php, file, glob, data, http, ftp, phar, zip
Registered Stream Socket Transports tcp, udp, unix, udg, ssl, sslv3, tls
Registered Stream Filters zlib.*, bzip2.*, convert.iconv.*, string.rot13, string.toupper, string.tolower, string.strip_tags, convert.*, consumed, dechunk`

Which seems to suggest I have PHP installed correctly.

I have a feeling there is some config line somewhere that I have missed, and the components are not talking to eachother correctly. Excuse my ignorance; I’m very new to both Linux & LAMP, but I’m trying to learn as I go.

Any ideas what may be causing this issue?