This seems to be quite a common error for many people installing PhpMyAdmin for the first time.
The phpmyadmin (pma) docs mention it – basically stating that the mysql client is out of date.
In the past I’ve solved this by updating my version php, and also by using the manual install as the windows installer package uses (well it used to) an old version of the mysql client library.
However today I discovered a simple work here (thanks a million to whoever posted it!!!!) – and what a simple solution it is! Just run the following SQL to reset your password:
SET PASSWORD FOR user@localhost = OLD_PASSWORD('password');