I have installed maven on my machine through command prompt. Also setup a local repository and settings.xml file along with it.
To set it up on eclipse, I went to Help -> Software Updates. Clicked on available software, clicked on add site, in which i copied the following URL: http://m2eclipse.sonatype.org/update/.
Then I proceeded with the update. But I got an error saying no repository found at the above URL. Tried setting it up with some other URL, but I got the same error.