How do I set up my Linux X terminal so that Emacs has access to 256 colors?

When I run emacs -nw in an X terminal window, and I ask for M-x list-colors-display, I am offered a paltry palette:

black                                                     
red    
green  
yellow 
blue   
magenta
cyan   
white

I am told it is possible to get 265 colors. Setting the TERM environment variable to xterm-256color does not do the job. What does?

Solution

According to this you need ncurses-term library in addition to setting TERM to xterm-256color.

Okay, this has some other things to try like :

The xterm in Ubuntu Edgy does not advertise 256 color support by
default.  To fix this you need to install a 256 color terminfo entry,
and tell xterm to use it:

    apt-get install ncurses-term
    echo XTerm.termName: xterm-256color \
      >>~/.Xdefaults
    xrdb -merge ~/.Xdefaults

and :

So you need a file term/screen-256color.el in your load-path.  Emacs
22 expects it to contain a terminal-init-screen defun.  Emacs 21
expects it to contain a bunch of top-level forms.  Here's what I use:

    ;;; This is for GNU Emacs 22
    (defun terminal-init-screen ()
      "Terminal initialization function for screen."
      ;; Use the xterm color initialization code.
      (load "term/xterm")
      (xterm-register-default-colors)
      (tty-set-up-initial-frame-faces))

    ;;; This is for GNU Emacs 21
    (if (= 21 emacs-major-version)
        (load "term/xterm-256color"))

For Emacs 21, you also need to install the xterm-256color.el file from

    http://www.splode.com/~friedman/software/emacs-lisp/src/term/xterm-256color.el