This post is really very helpful for me. Thanks for sharing it. You have solved my problem.
 

Sorry that didn't work, I was pretty sure it would... :(

I don't use WordPress, but from my reading I'm sure that it's a permission issue (like noted in the article). Perhaps the directory that the installs need to go in is read only (even when owned by www-data)?

AFAIK the FTP request is aimed at WordPress users on shared hosting, not on dedicated servers (like TKL is). TKL does not have a stadard FTP server installed (only SFTP via OpenSSH - and as www-data is not allowed to login as a normal user SFTP won't work).

Acording to the article you link to WP only needs write access to the wp-content/plugins folder (which I assume is probably at /var/www/wordpress/wp-content/plugins) so try

chmod -R 655 /var/www/wordpress/wp-content/plugins

and check ownership and permissions

cd /var/www/wordpress/wp-content/plugins
ls -la

If that doesn't work, then I'm not sure sorry...

I did the "chown" part but not the "I also had to make the FS_Method,direct update in wp-config.php" part and it is now working.

Used turnkey-wordpress-13.0-wheezy-amd64.iso

There is also a workaround that means you don't need to use the plugin. From Issue #173:

1. Give the webserver ownership of the /var/www/wordpress/wp-content/ folder tree.

chown -R www-data:www-data /var/www/wordpress/wp-content

2. Add an entry to the wp-config.php file. Open it for editing:

nano /var/www/wordpress/wp-config.php

And add this:

define('FS_METHOD', 'direct');

Make sure it goes ABOVE this line:

/* That's all, stop editing! Happy blogging. */

3. Restart Apache:

service apache2 restart