// Create an XmlUrlResolver with default credentials.
 XmlUrlResolver resolver = new XmlUrlResolver();
 resolver.Credentials = CredentialCache.DefaultCredentials;

 // Create the reader.
 XmlReaderSettings settings = new XmlReaderSettings();
 settings.XmlResolver = resolver;
 XmlReader reader = 
      XmlReader.Create("http://serverName/data/books.xml", settings);

class XmlCachingResolver : XmlUrlResolver
{
    bool enableHttpCaching;
    ICredentials credentials;

    //resolve resources from cache (if possible) when enableHttpCaching is set to true
    //resolve resources from source when enableHttpcaching is set to false 
    public XmlCachingResolver(bool enableHttpCaching)
    {
        this.enableHttpCaching = enableHttpCaching;
    }

    public override ICredentials Credentials
    {
        set
        {
            credentials = value;
            base.Credentials = value;
        }
    }

    public override object GetEntity(Uri absoluteUri, string role, Type ofObjectToReturn)
    {
        if (absoluteUri == null)
        {
            throw new ArgumentNullException("absoluteUri");
        }
        //resolve resources from cache (if possible)
        if (absoluteUri.Scheme == "http" && enableHttpCaching && (ofObjectToReturn == null || ofObjectToReturn == typeof(Stream)))
        {
            WebRequest webReq = WebRequest.Create(absoluteUri);
            webReq.CachePolicy = new HttpRequestCachePolicy(HttpRequestCacheLevel.Default);
            if (credentials != null)
            {
                webReq.Credentials = credentials;
            }
            WebResponse resp = webReq.GetResponse();
            return resp.GetResponseStream();
        }
        //otherwise use the default behavior of the XmlUrlResolver class (resolve resources from source)
        else
        {
            return base.GetEntity(absoluteUri, role, ofObjectToReturn);
        }
    }
}