I tried the solution suggested and didn't work.
I think my problem is related to Framework 4.0,
Web.config content
--------------------------
<compilation debug="true" targetFramework="4.0">
<assemblies>
<add assembly="Telerik.Web.UI, Version=2008.3.1314.35, Culture=neutral, PublicKeyToken=121FAE78165BA3D4" />
<add assembly="System.Design, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B03F5F7F11D50A3A" />
<add assembly="System.Windows.Forms, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089" />
<add assembly="System.Drawing.Design, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B03F5F7F11D50A3A" />
</assemblies>
</compilation>
<httpHandlers>
<add path="Telerik.Web.UI.DialogHandler.aspx" verb="*" type="Telerik.Web.UI.DialogHandler, Telerik.Web.UI, Culture=neutral, PublicKeyToken=121fae78165ba3d4" validate="false" />
<add path="Telerik.Web.UI.SpellCheckHandler.axd" verb="*" type="Telerik.Web.UI.SpellCheckHandler, Telerik.Web.UI, Version=2008.3.1314.35, Culture=neutral, PublicKeyToken=121fae78165ba3d4" validate="false" />
<add path="Telerik.RadUploadProgressHandler.ashx" verb="*" type="Telerik.Web.UI.RadUploadProgressHandler, Telerik.Web.UI" />
</httpHandlers>
Bold line is highlighted in red when error occurs, I had copied file Telerik.Web.UI.dll to bin.
Thanks in advance.
Steve