The SSH Cryptosystem
Subject:   Directory Permissions on .ssh
Date:   2002-11-20 10:59:03
From:   anonymous2
I had with the public key exchange mechanism that boiled down to the permissions on the ~/.ssh directory and authorized_keys file.

Check that the whole lot are not world readable

chmod -R o-rwx ~/.ssh

I also took off group write access for good measure, so try this if you keep getting requests for passwords and you know everything else is ok.