local mail relay problem in Sendmail

I have a linux box. Sendmail is work fine in this box. The only problem I am facing is whenever I send mail using the mail command to the outside world or to root@localhost, I get this error -

127.0.0.1 localhost denied from relaying

The command I used to send mail is -

Ls -l | mail -s �listing� root@localhost

The content of my /etc/mail/access -

Localhost RELAY
Localhost.localdomain RELAY
172.128.x RELAY

In my sendmail.mc file if I change the ip address to 12.0.01 it works, but in this case my rest of the users are unable to send mail through this server to the outside world.

DAEMON_OPTIONS(`Port=smtp,Addr=172.128.64.10, Name=MTA')dnl

Currently the ip address in the sendmail.mc file is of my local network/lan.

Please let meknow what could be the problem and how to rectify this.

Regards,