Let's make the long story short. Here is what happened:
I faced the following strange error:
Error: java: System Java Compiler was not found in classpath
This was despite of the fact that I had Java 1.7/1.8 fully installed and had no problems working with it through the terminal.
The solution that fixed my problem was as follows:
In:
Project Settings > Compiler > Java Compiler
I changed the drop down Use compiler
from Javac
to Eclipse
!
Non of the other solutions I found on the web was helpful. Hope this helps you my unknown fellow reader.
IMPORTANT: THIS HAD NOTHING TO DO WITH MY JAVA_HOME AS IT WAS SET CORRECTLY.