Yagarto fresh install: make Error 1

Hi,

Did a new install of Yagarto and tools. I can compile from the terminal 
just fine, but when I try to compile in Eclipse it outputs this error:

**** Build of configuration Default for project test ****

make all
arm-elf-gcc -x assembler-with-cpp -c -mcpu=arm7tdmi -g -gdwarf-2 
-Wa,-amhls=src/startup.lst   src/startup.s -o src/startup.o
make: arm-elf-gcc: No such file or directory
make: *** [src/startup.o] Error 1

I suspect a path problem, but when I point my terminal to the same 
working directory where the project is, it compiles fine.. Is this error 
pointing to a project file it can't find or the actual toolchain 
command?

FWIW, I am using Mac OS 10.6

Any hints?

Thanks.