Thanks Jari,
solution worked for me. I am using CRM 4.0 with UR 7, SQL 2008, Win 2008 R2. Initially i tried to change the CRM config in order to use new version of report viewer control, but didn't worked for me.
After installing Report Viewer Redistributable 2005 Service Pack 1 GDIPLUS.DLL Security Update its working fine. Dont forget to do IISRESET after installation.
Sunil