SSH still asks for password after setting up key based authentication

Question

I have successfully created a key based auth for root user from my A machine to my B machine.

Now, I created a new user on B machine, the same as on A machine, let's call him USER. I created a home dir for him on B machine /home/USER and I want to create key based auth for him from machine A to B machine.

So, I ran on A machine

1. ssh-keygen -t rsa, accepted all paths, so /home/USER/.ssh/id_rsa and with no phrases
2. ssh-copy-id -i /home/USER/.ssh/id_rsa.pub USER@BmachinesIP, entered password and got massage

Now try logging into the machine bla bla bla

So everything seems to be OK.

But when I tried to connect ssh USER@BmachinesIP I was asked for a password. I tried to see the log and ran ssh -vvv USER@BmachinesIP and here is a part of output:

debug1: Authentications that can continue: publickey,password
debug3: start over, passed a different list publickey,password
debug3: preferred gssapi-keyex,gssapi-with-mic,publickey,keyboard-interactive,password
debug3: authmethod_lookup publickey
debug3: remaining preferred: keyboard-interactive,password
debug3: authmethod_is_enabled publickey
debug1: Next authentication method: publickey
debug1: Offering public key: /home/USER/.ssh/id_rsa
debug3: send_pubkey_test
debug2: we sent a publickey packet, wait for reply
debug1: Authentications that can continue: publickey,password
debug1: Trying private key: /home/USER/.ssh/id_dsa
debug3: no such identity: /home/USER/.ssh/id_dsa
debug2: we did not send a packet, disable method
debug3: authmethod_lookup password
debug3: remaining preferred: ,password
debug3: authmethod_is_enabled password
debug1: Next authentication method: password
USER@BmachinesIP's password:

So, can anyone tell me what I've done wrong or what I should change? Maybe the issue is in the permissions, here they are:

on A machine:

drwx------  2 USER USER    SIZE DATE TIME .ssh
-rw-------  1 USER USER 1675 2011-10-31 14:36 id_rsa
-rw-r--r--  1 USER USER 413 2011-10-31 14:36 id_rsa.pub

and on B machine:

drwx------  2 USER defaultGroup    SIZE DATE TIME .ssh
-rw-------    1 USER defaultGroup    SIZE DATE TIME authorized_keys

Answer 1

I have found a solution. There was an issue in permissions.

/home/USER on remote machine was granted all permissions, but for key based auth it must be set to 755