sbteclipse is a plugin for sbt 0.11.2 or higher. Please make sure that you are using an appropriate sbt release. In order to download and install sbt, please refer to the sbt Getting Started Guide / Setup.
As sbteclipse is a plugin for sbt, it is installed like any other sbt plugin, that is by mere configuration. For details about using sbt plugins, please refer to the sbt Getting Started Guide / Using Plugins.
Most probably you can skip the details and just add sbteclipse to your global or local plugin definition. Global plugin are defined in a plugins.sbt file in the ~/.sbt/plugins/ directory and local plugins are defined in a plugins.sbt file in the project/ folder of your project.
In order to add sbteclipse, just add the below setting to the relevant plugin definition, paying attention to blank lines between settings:
addSbtPlugin("com.typesafe.sbteclipse" % "sbteclipse-plugin" % "2.0.0-M3")
Attention: Make sure you use sbteclipse-plugin! There is also an artifact sbteclipse-core, which doesn't add the command eclipse automatically and is mainly meant for integration purpose.
After adding the sbteclipse plugin like this, you should either start sbt or, if it was already started, reload the current session by executing the reload command. If everything worked, you should have the new command eclipse available. Now read on about how to use sbteclipse.