I want to know if back links really work and if yes then what is the best white hat practice which should really give edge to the keywords. Does old ways of backlinking still work like directories submissions, forums, comments, press releases, articles submissions etc.?
Getting back on the OP topic, links are still the bread and butter, and can help or hinder a site greatly, depending upon the resource. Forget volumes of links. I've always worked on quality: It's far better to have one great quality link than many, many links for worthless sources.
Some of the suggestions in this thread are good, and news sites can play a part, however, press release submission sites no longer provide the quality, just quantity. Of course, if it's a quality story, distributed by a quality distribution service, and it gets picked up by mainstream press, it'll be beneficial. If you've been successful and got a link from an authority, such as WSJ, BBC, etc., or it's a link from a research paper at MIT.
Directories, on the most part, are not worth the effort they once were due to the low quality of so many clones set up just to gain links.
Again, article submissions of quantity are generally abused and mostly worth very little.
Don't think individual keywords, but think about meaning. For example, look at the text of a web page and look at the overall meaning of the page, and not the individual keywords.
What it means is that working harder for quality link development should be a target.