From a tutorial here:
http://ankurm.com/blog/api/using-localhost-for-facebook-app-development/1091/
I tried to set up a Local development Area for my Facebook
This is what I used to do.
If you are using Windows, you need to modify the host file. Host file location will be at %SystemRoot%\System32\drivers\etc\
Add a new line in host file like this
127.0.0.1 localhost.YOUR-SITE-NAME.com
Save the host file.
Go to FB apps setting control panel and give localhost.YOUR-SITE-NAME.com
in Apps domain field. Save changes.
Now load you local environment like localhost.YOUR-SITE-NAME.com
from your browser.
NB: change YOUR-SITE-NAME with your domain name.