[mayur007]

In recent WP8.1 Update 1, Microsoft had introduce to open a password protected file which was missing in WP8.0. But the password protected file cant be edited on phone its just read only file. Has anyone observed this and any solution that i can edit the office file which is password protected one or else this update for office app is of no use.

[InvisGhost]

This update for the office app is of use, just maybe not useful for you.

Contact office support and see what they say, I can't test this out on my end here but it may be the case that you can just read the documents and not edit them. Another thing may be is that the document you're editing is also protected from editing on top of being password protected.