How to avoid MySql connectivity issue via remote db for the hosted webservice via remote db?

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C#2.0

C#

ASP.NET

webservice

How to avoid MySql connectivity issue via remote db for the hosted webservice via remote db?
I have hosted my webservice in IIS 7.0 which is used to fetch data from MySql Db. But on Invoking the web service no data is coming in the Xml Output Tag.
Privilege is given for all hosts(Limit to Host Matching is set as %)

Error on connecting to MySql is as follows:
Access is denied using sql_native_password{USING PASSWORD YES}

When the same is run via local machine server there is no such error. 

Connection String is set as follows:
<add name="ConnectionString" connectionstring="server=nestit-353vm1;uid=internal;pwd=password2.;database=nest_internal;" />