I used the code provided by Oleg Tkachenko, but, the resuling xml output still contained xml declaration as 
<?xml version="1.0" encoding="utf-16"?>.

Reviewing the TextWriter's Encoding, I noticed it as overridable property and then I used a class derived from StringWriter as shown below and replaced the StringWriter with VStringWriter in XSL processing code.

using System.IO;
  /// <summary>
  /// Used to Write output of XSL transform so that the output   
  /// contains declaration with utf-8 attribute
  /// </summary>
  public class VStringWriter : StringWriter
  {
    private Encoding m_encoding = Encoding.UTF8;
    public VStringWriter(Encoding enc) 
      : base()
    {
      m_encoding = enc;
    }
    public override Encoding Encoding
    {
      get { return m_encoding; }
    }
  }

...
public XmlDocument ProcessDataWithXSL(XmlDocument xmlDocWithUTF8Decl, string strXSLWithUTF8Decl)
{
   try
   {
     XslTransform xsltTransformer = new XslTransform();
     xsltTransformer.Load(new XmlTextReader(
        new StringReader(strXSLWithUTF8Decl)),null,null);

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

     XPathDocument xmlDoc = new XPathDocument(
        new StringReader(xmlDocWithUTF8Decl.OuterXml));

        VStringWriter sw = new VStringWriter(Encoding.UTF8);

        xsltTransformer.Transform(xmlDoc, null, sw, resolver);

        XmlDocument xmlDataDoc = new XmlDocument();
        string strData  = sw.ToString();
        xmlDataDoc.LoadXml(strData);

        return xmlDataDoc;
      }
      catch(Exception ex)
      {
        throw new ApplicationException(
              "Failed to process xml data", ex);
      }
    }

This worked for me. There might be some typo here because I modified function and variable names.
Thanks and good luck.

---
Posted using Wimdows.net NntpNews Component - 

Post Made from http://www.DotNetJunkies.com/newsgroups Our newsgroup engine supports Post Alerts, Ratings, and Searching.