Public bug reported:

After installing Ubuntu 8.04, or running it from the live CD for that
matter, the top and bottom panels don't utilize the maximum resolution.
The same goes for the login screen. While the bottom panel can be
dragged to the bottom of the screen, resulting in a maximized width
panel, I've found no way to achieve the same for the top panel.
Applications, on the other hand, can be maximized to the full screen
resolution. When prompted for the password for admin actions, only the
small resolution is being grayed out.

Attached you'll find three images, illustrating the issue.

How can I fix the issue? I'd like to have everything working on the full
desktop resolution.

Specs:
OS: Ubuntu 8.04 (all updates installed)
Graphics card: ATI Radeon X850 (default Ubuntu drivers)
Screen: Eizo FlexScan S1931 (1280x1024)

** Affects: ubuntu
     Importance: Undecided
         Status: New

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Login and default panels don't utilize full resolution
https://bugs.launchpad.net/bugs/230818
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