In order to debug Silverlight projects hosted within a non-Silverlight project, such as ASP.NET web application, you can use the "Add Silverlight Link" option from the Visual Studio Project context menu within the Solution Explorer.
By linking to the Silverlight project and hosting it within the ASP.NET project that contains the web service, avoids the infamous web service related "Cross-Domain" problem.
Once this is done, files including output assemblies from the ClientBin in the Silverlight project will be automatically copied to your hosting project, and they will be kept in sink when one performs a build. Of course, however, content resources used by your Silverlight project, such as media files, will not be copied, and may require a build event copy task, as show below.
This tip is taken from an excellent Silverlight/WPF tutorial series by Daniel Vaughan
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