I had a problem similiar to this one. Perhaps what I did will solve your problem too.
I had all of my ASP.NET code wrapped between the <form> tags. Doing this caused the white space. However, when I moved the <form> tag into a table the white space went away.
For example:
<table>
<tr>
<td><form>.....</form></td>
</tr>
</table>
When I did this the white space went away.