I followed the steps given at this url to setup openldap in debian lenny. Both my server and client are debian lenny.
Thanks for the url
http://www.debuntu.org/ldap-server-and-linux-ldap-clients
The steps were so simple and it works out of box.

The domain ldif file need to be created separately. Assuming our domain is example.com. The entry in domain ldif file should look like this
dn: dc=example, dc=com
dc: example
objectclass= domain


In the client when libnss-ldap, libpam-ldap and nscd packages were installed it would interactively ask for the ip number or hostname of ldap server on providing it a entry in /etc/libnss-ldap.conf and /etc/pam_ldap.conf like
uri ldapi:///ipnumber
would be made. I commented this line and created a new line like this
host ipnumber of ldap server
in both these lines

Apart from the above methods i had to stop network-manger service starting at boot time at clients for clients to connect with ldap server