I have googled around enough & only got to know the version of dynamic web project that is needed.
Is a dynamic web project a pre-requisite in eclipse to create/host a web service? In other words, I have an existing project(built with ant) which hosts a SOA service(WSDL based). However I want to expose a restful webservice inside the same project (using Tomcat).
If by "project" you mean "web app", then I don't see why not. All SOAP and REST implementations I've encountered were servlet-based, and can thus be used in any standard Java web app, alongside any other servlets that web app may use. If the question is whether Eclipse supports both SOAP and REST functionality within the same web app, then we should probably move the topic over to the IDE forum.
His brain is the size of a cherry pit! About the size of this ad: