ADT or Eclipse with ADT plugin crashes with out of memory error

Android Developer Tools or Eclipse loading ADT plugin may crash with Out of memory exception. Sometimes ADT or Eclipse may also crash while loading any activity layout xml with the errors shown in below images.
PermGen Space errors


Out of memory error


This may happen because you might be having older version of Java SDK installed. Installing the latest version of JDK like 6 or 7 should resolve these errors.

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