configure: error: C compiler cannot create executables

I don't understand this. I had compiled PHP with Freetype on the server and it worked perfectly. Not today though. Suspecting an update had altered PHP, I went to recompile it and I can't do it. I get the message "configure: error: C compiler cannot create executables" I have downloaded Xcode 3.2.4 and re-installed but I still get the same error. Any clues please post.