Invalid Hexadecimal character returned by webmethod call

Hello,
I have a 2007 excel addin app (VS2005) which calls a web service (also developed in VS2005). When the webservice returns a large amount of data I get the following exception

System.InvalidOperationException: There is an error in XML document (1, 14493956). ---> System.Xml.XmlException: '', hexadecimal value 0x1C, is an invalid character. Line 1, position 14493956.
   at System.Xml.XmlTextReaderImpl.Throw(Exception e)
   at System.Xml.XmlTextReaderImpl.Throw(String res, String[] args)
   at System.Xml.XmlTextReaderImpl.Throw(Int32 pos, String res, String[] args)
   at System.Xml.XmlTextReaderImpl.ThrowInvalidChar(Int32 pos, Char invChar)
   at System.Xml.XmlTextReaderImpl.ParseNumericCharRefInline(Int32 startPos, Boolean expand, BufferBuilder internalSubsetBuilder, Int32& charCount, EntityType& entityType)
   at System.Xml.X ...