Is it possible to develop facebook apps locally on my system so that the callback URL need not be a public URL like http://abc.com
and instead can be an internal IP address like localhost http://127.0.0.1
?
You can access the Developer Settings panel by going to the Apps panel or developers.facebook.com/docs, hovering over your profile image in the upper right corner, and selecting Developer Settings from the dropdown menu.
View App Review Requests From there, scroll through the list of options and click Request for any permissions you'd like to add. You'll need to fill out a form that confirms your Facebook Login button is live and can be tested. Also describe how people use your site and how you'll use the requested permission.
It is now possible to develop Facebook apps locally.
I believe this is true especially if you're developing in an iframe, which is now the standard way of developing facebook apps (FBML is deprecated).
In case this does not work, there are still some ways to make working more convenient.
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 convenient to develop on a remote host.
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