Membership2: Password Reset not working: Invalid Reset Key

The problem:
When a user clicks on 'reset password' at http://www.MyURL.com/login he is prompted to enter a username or email. On doing this an email is sent with a link even though this error is displayed 'Request failed'.

When the link is followed (clicked) the following error is displayed 'Sorry, we did not find a valid reset-key. Please request a new reset email and try again'

Thanks for giving full details of:
1) Why this is happening
2) Detailed step-by-step procedure to fix this problem

Thanks in advance