What authentification method are you using? Good idea is to disable all other authentification methods except plain login/password and try again. I'm suggesting this because
works just as supposed to on my system.
Try modyfing those lines in /etc/ssh/sshd_config
Code:
RSAAuthentication no
PubkeyAuthentication no
ChallengeResponseAuthentication no
UsePAM no
PasswordAuthentication yes
restart sshd and try again.