is it possible to develop facebook app locally on using facebook php scripts so that the callback url need not be http://abc.com and can be http://127.0.0.1 or something like that i mean can i not use it to build an app locally on my system
The documentation says that it is not possible to test your application solely on the localhost.
Facebook's servers cannot access "localhost" or an internal IP address.
However, there are some ways to make working more convienant.
Take a look at this answer:
Testing FB apps is still a rather primitive process.
I generally setup a test application that is a complete copy of the production settings inside the FB development environment that uses an SSH tunnel to point to my development server. You can setup as many applications as you need inside FB - I generally have a development application, a staging app and production. Staging and Production are both on "live" servers rather than an SSH tunnel.
The rest of the answers to this question detail different workflows that people have utilized to make it more convienant to develop on a remote host.