Thanks for the Response but again no help in my scenario.

Please find my code below.

1. Default.aspx

<%@ Page Title="Home Page" Language="C#" MasterPageFile="~/Site.master" AutoEventWireup="true"
    CodeBehind="Default.aspx.cs" Inherits="WebApplication2._Default" %>

<%@ Register Src="~/UserControls/ModelPopup.ascx" TagName="ModelPopup" TagPrefix="mp1" %>
<asp:Content ID="HeaderContent" runat="server" ContentPlaceHolderID="HeadContent">
</asp:Content>
<asp:Content ID="BodyContent" runat="server" ContentPlaceHolderID="MainContent">
    <div>
        <mp1:ModelPopup ID="modelPopup" runat="server" />
    </div>
</asp:Content>

2. User Control .ascx

<%@ Control Language="C#" AutoEventWireup="true" CodeBehind="ModelPopup.ascx.cs"
    Inherits="WebApplication2.UserControls.ModelPopup" %>
<%@ Register Assembly="AjaxControlToolkit" Namespace="AjaxControlToolkit" TagPrefix="asp" %>
<%@ Register Src="~/UserControls/InsidePanel.ascx" TagName="PopupPanel" TagPrefix="ta1" %>
    <div>
        <table width="100%">
            <tr>
                <td>
                    <asp:Label runat="server" ID="lblCommentsTitle"></asp:Label>
                </td>
                <td align="right">
                    <asp:ImageButton ID="btnOptions" runat="server" ImageUrl="~/Images/plus-8.png" AlternateText="Click to expand comment area." />
                </td>
            </tr>
            <tr>
                <td colspan="2">
                    <asp:TextBox runat="server" ID="txtBxComments" TextMode="MultiLine" Rows="4" Width="100%"
                        CssClass="Text"></asp:TextBox>
                </td>
            </tr>
        </table>
        <asp:ModalPopupExtender ID="mpeOptions" runat="server" DropShadow="true" OkControlID="ppTextArea_btnOk" 
            CancelControlID="ppTextArea_btnCancel" TargetControlID="btnOptions" PopupControlID="ppTextArea_pnlMain"
            BackgroundCssClass="modalBackground" />
        <ta1:PopupPanel runat="server" ID="ppTextArea"  >
            <contenttemplate>
            <asp:TextBox runat="server" ID="txtBxTextArea" TextMode="MultiLine" Width="100%"
            Rows="15" CssClass="Text"></asp:TextBox>
           </contenttemplate>
        </ta1:PopupPanel>
    </div>

3. User control .ascx InsidePanel

<%@ Control Language="C#" AutoEventWireup="true" CodeBehind="InsidePanel.ascx.cs"
    Inherits="WebApplication2.UserControls.InsidePanel" %>

<asp:Panel runat="server" ID="pnlMain" CssClass="modalPopup">
    
    <asp:PlaceHolder runat="server" ID="phMain" />
    
    <br />
    <asp:Button runat="server" ID="btnOk" Text="OK" OnClick="btnOk_Click" />
    <asp:Button runat="server" ID="btnCancel" Text="Cancel" OnClick="btnCancel_Click" />
</asp:Panel>

4. Code Behind InsidePanel

using System;
using System.Collections.Generic;
using System.Linq;
using System.Web;
using System.Web.UI;
using System.Web.UI.WebControls;

namespace WebApplication2.UserControls
{
    public partial class InsidePanel : System.Web.UI.UserControl
    {
        protected void Page_Load(object sender, EventArgs e)
        {

        }

        #region Public Properties

        //This property allows for a way to add child controls to the user control on the page
        //Any controls added to it are added to the place holder in the OnInit method below
        public Control ContentTemplate { get; set; }

        #endregion

        #region Public Events and Delegate

        //the public events must conform to this format
        public delegate void Button_Click(object sender, EventArgs e);

        //these two public events are to be customized as need on the page and will be called
        //by the private events of the buttons in the user control
        public event Button_Click OkClick;
        public event Button_Click CancelClick;

        #endregion

        #region Private Events

        //These events call the public events assigned to the user control on the page

        protected void btnOk_Click(object sender, EventArgs e)
        {
            this.OkClick(sender, e);
        }

        protected void btnCancel_Click(object sender, EventArgs e)
        {
            this.CancelClick(sender, e);
        }

        #endregion

        protected override void OnInit(EventArgs e)
        {
            base.OnInit(e);

            //add the child controls from the public property to the place holder in the panel
            this.phMain.Controls.Add(this.ContentTemplate);
        }
    }
}

Thanks

Theo