you script looks (and works) fine. so i dont think the problem is in your script

I found firebug/live http headers firefox addons to be helpful in this situation
see if your client is actually sending "Authorization      Basic" header

Kranthi.
http://goo.gl/e6t3

Kranthi, thanks for looking.. I did find out with the help of the host.. that the issue was because PHP was running in fastcgi mode instead of apache module mode. Now it is behaving as expected.

-Govinda

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