And when he was gone forth into the way, there came one running, and kneeled to him, and asked him, Good Master, what shall I do that I may inherit eternal life? And Jesus said unto him, Why callest thou me good? there is none good but one, that is, God. Thou knowest the commandments, Do not commit adultery, Do not kill, Do not steal, Do not bear false witness, Defraud not, Honour thy father and mother.
    And he answered and said unto him, Master, all these have I observed from my youth.
    Then Jesus beholding him loved him, and said unto him, One thing thou lackest: go thy way, sell whatsoever thou hast, and give to the poor, and thou shalt have treasure in heaven: and come, take up the cross, and follow me.
    And he was sad at that saying, and went away grieved: for he had great possessions.
    And Jesus looked round about, and saith unto his disciples, How hardly shall they that have riches enter into the kingdom of God!
    And the disciples were astonished at his words. But Jesus answereth again, and saith unto them, Children, how hard is it for them that trust in riches to enter into the kingdom of God!
    It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.
    And they were astonished out of measure, saying among themselves, Who then can be saved?
    And Jesus looking upon them saith, With men it is impossible, but not with God: for with God all things are possible.
    Mark 10: 17 –27 (KJV)
A biblical phrase for the smallest opening imaginable. A remark attributed to Jesus in Mark 10:25. Paraphrased-- he announces that the camel, largest of the familiar animals of the era, can pass through the needle's eye more easily than a wealthy person can enter the kingdom of God. This startling image is toned down by the remark that with God all things are possible. The wealthy young ruler could not possibly abandon all and walks away. Not able to understand that Jesus is telling him that the Lord was prepared to give grace to the young man, if he had only said, O Lord, I cannot abandon my wealth, but give me grace.

His entire commentary draws attention to the dissimilarity between human activity and divine grace. This answer is so general in form that it cannot be regarded as complete; nor would it appear that Jesus expected it to be so regarded.

Some patristic interpreters remove the mixed metaphor in this figure of speech by reading rope (Greek kamilos) in place of camel (Greek kamElos). However, the variant form in the Babylonian Talmud, on the other hand, keeps the animal imagery and tell of the elephant passing through a needle's eye as something impossible. The proverbial saying that; for whatever may be possible with difficulty for a camel would be quite impossible for an elephant. The saying is hyperbolic - an exaggeration, to describe a thing very difficult to do.

Later Medieval affections for moral allegory created the suggestion that needle's eye referred to a narrow pedestrian gate used after nightfall when the large gates of the city were shut. Only by the load being removed from the camel's back, have him go down on his knees and crawl through the small opening, and with much pushing and pulling, could the animal be got through; so the rich man must get rid of his load of riches if he wished to enter the Kingdom of God. However, there is no evidence for any gate with this name and no ancient writer ever records this explanation; yet if it was customary for camels to get through postern gates such an explanation might have been expected from men familiar with the sight.

References

The Bible Study :
http://www.bibletopics.com/biblestudy/index.htm

Needle's Eye by Gary Larrabee:
http://www.steinbrueck.org/

Holy Bible; King James Version.

The Oxford Companion to the Bible, 1993.