EDIT: I'd like to revise my answer based on some new things I discovered while working with update panels in UpdateMode="Conditional".
This is still in context of addressing the OP's issue of encountering the above error.
The scenario for me is that I have a parent update panel with several nested child update panels:
<asp:UpdatePanel ID="upParent" runat="server" UpdateMode="Conditional">
<ContentTemplate>
<%-- Header Content --%>
<asp:UpdatePanel ID="upChild1" runat="server" UpdateMode="Conditional">
<ContentTemplate>
<%-- Child1 Content --%>
</ContentTemplate>
</asp:UpdatePanel>
<asp:UpdatePanel ID="upChild2" runat="server" UpdateMode="Conditional">
<ContentTemplate>
<%-- Child2 Content --%>
</ContentTemplate>
</asp:UpdatePanel>
<asp:Button ID="btnEditMode" runat="server" Text="Edit" OnClick="btnEditMode_Click"></asp:Button>
</ContentTemplate>
</asp:UpdatePanel>
In order for the Edit button to change content in both child update panels and also refresh the overall Parent update panel without causing any issues, you might want to consider doing an asynchronous postback:
<asp:UpdatePanel ID="upParent" runat="server" UpdateMode="Conditional">
<Triggers>
<asp:AsyncPostBackTrigger ControlID="btnEditMode" EventName="Click" />
</Triggers>
<ContentTemplate>
<%-- Header Content --%>
<asp:UpdatePanel ID="upChild1" runat="server" UpdateMode="Conditional">
<ContentTemplate>
<%-- Child1 Content --%>
</ContentTemplate>
</asp:UpdatePanel>
<asp:UpdatePanel ID="upChild2" runat="server" UpdateMode="Conditional">
<ContentTemplate>
<%-- Child2 Content --%>
</ContentTemplate>
</asp:UpdatePanel>
<asp:Button ID="btnEditMode" runat="server" Text="Edit" OnClick="btnEditMode_Click"></asp:Button>
</ContentTemplate>
</asp:UpdatePanel>
This works for me, I don't get the above mentioned (OP's) error any longer.
Interestingly enough, almost similar to the OP's scenario, I've been working with Ajax Tab Controls and each tab contained child update panels. This is where I've encountered the exact same error message and resolved it by adding the asynchronous post back trigger.