Conneting to EWS using default windows credentials

I have a ASP.NET application (.NET framework 3.5) which is deployed on IIS Server 5.1 trying to connect to Exchange web service 2007 using DefaultNetworkCredentials giving 401 unauthorized. I have set up windows auth in IIS  and gave identity impersonate = true in web config

This is my code

service = new ExchangeService(ExchangeVersion.Exchange2010_SP1);  service.UseDefaultCredentials = true;

  service.Credentials = System.Net.CredentialCache.DefaultNetworkCredentials; 

service.Url = new Uri("https://xxxxxxxxx/EWS/Exchange.asmx");

I am getting 401 unauthorized, It is connecting if I hard code the userid, password and domain

Please help how to resolve this issue

Did anyone try to connect to Exchange Web Service using default credentials