Issue with Delegation and WCF

I am using a WCF service running on a windows 2003-SP2 Server with IIS 6.0 inside an asp.net application.
I have another asp.net application (the client) running on the same server attempting to connect to the WCF service.
I am trying to get the client app to connect-as the user logged into the browser to the WCF service.
My error is the dreaded:
The HTTP request is unauthorized with client authentication scheme 'Negotiate'. The authentication header received from the server was 'Negotiate,NTLM'
The website in IIS has:
Annonymous Access: Disabled
Windows Authentication: Enabled
The web.config on both the server and client contain the following:
<authentication mode="Windows"/>
<identity impersonate="true" />
The WCF service has the following in the web.config:
<system.serviceModel>
  <bindings>
    <basicHttpBinding ...