Browser authentication dialog when HTTPService fails with a 401 response code

I am using a HTTP Service to talk to a third party API and passing username/password in HTTP Basic Auth header.
When i enter wrong credentials through my application, as expected i get a 401 unauthorized response. But before the fault handler gets called, my browser shows the authentication dialog asking me to re-enter the username/password.

It happens on safari and firefox browser on OS X. I have not checked other environments.

Is this expected? I do not want the browser to show me an authentication dialog and want my application
to handle the 401 error.

thanks,
Sunil