I have been through lots of forums and checked various posts on similar topic but non seems to work out for me.
I have freshly installed XAMPP 1.7.7 on my Ubuntu 11
Go to phpMyAdmin/config.inc.php edit the line
$cfg['Servers'][$i]['password'] = '';
to
$cfg['Servers'][$i]['password'] = 'yourpassword';
This problem might occur due to setting of a password to root, thus phpmyadmin is not able to connect to the mysql database.
And the last thing change
$cfg['Servers'][$i]['extension'] = 'mysql';
to
$cfg['Servers'][$i]['extension'] = 'mysqli';
Now restart your server. and see.