WCF error: wshttpbinding The caller was not authenticated by the service

Question

I have created the WCF stateful service and consume it in my window application. I have faced "The caller was not authenticated by the service" issue While running the application.

Web.Config file:

<bindings>

      <wsHttpBinding>
        <binding name="wsHttpBinding1" messageEncoding="Text" textEncoding="utf-8">
          <!--<security mode="None">-->
          <security mode="Message">
            <!--<transport clientCredentialType="None"/>-->
            <transport clientCredentialType="Windows" proxyCredentialType="None" realm="" />
            <message clientCredentialType="Windows" negotiateServiceCredential="true" algorithmSuite="Default" />
          </security>
        </binding>
      </wsHttpBinding>
</bindings>

<services>

<service name="REST.IPBX" behaviorConfiguration="ServiceBehavior">
        <endpoint address="" binding="wsHttpBinding" contract="WCF_IPBX.IIPBX">
          <identity>
            <dns value="http://xyz.xxx.w.y/"/>
          </identity>
        </endpoint>
        <endpoint address="mex" binding="mexHttpBinding" contract="IMetadataExchange"/>
      </service>
</services>

<serviceBehaviors>

<behavior name="ServiceBehavior">
          <serviceMetadata httpGetEnabled="true"/>
          <serviceDebug includeExceptionDetailInFaults="false"/>
        </behavior>
</serviceBehaviors>