Just to clarify what was actually wrong:
mysql> SET PASSWORD FOR root@localhost='PASSWORD' (password omitted)
where you have 'PASSWORD'(password omitted)
it should be PASSWORD('yourpassword')
PASSWORD in this case is actually a built in function that change your supplied plain text password into the expected encrypted password.
The first answer would have fixed it, I just felt like adding this to help understand what was wrong :)
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by: oklitPosted on 2009-09-02 at 13:29:25ID: 25245323
update mysql.user set password=password('your_pa ssword_her e') where user='root' and host='localhost'; our_passwo rd_here');
or
set password for root@localhost=password('y
And, after all:
flush privileges;