CGI script refuses to run python

[vikas]

Hi,
I am trying to get this python cgi script to work on apache.
I made a test script to break down the problem.

So now the script is just:
#!/usr/local/bin/python

I still get the same error in the web server log:

Could not find platform independant libraries <prefix>
Could not find platform dependant libraries <exec_prefix>
Consider setting $PYTHONHOME to <prefix>[:<exec_prefix>]
'import site' failed; use -v for traceback

How do I fix this?

Thanx
Vikas