You need to edit the rsreportserver.config file under Program Files\Microsoft SQL Server\MSRS10_50.MSSQLServer\Reporting Services\ReportServer.
Find the Authentication section and remove the <RSWindowsNTLM/> and <RSWindowsNegotiate/> entries. Replace these with an <RSWindowsBasic/> entry.
This change takes effect as soon as you save the file.
Alternatively, if you don't want to use Basic authentication, you can configure Kerberos. This is documented in the installation guide. It's a bit of an involved process.