I recently ran into the situation in which I couldn’t get PKA to work when SSHing into my Ubuntu server. I checked the key pair (works fine SSHing into other servers), directory permissions, /etc/ssh/sshd_config, /var/log/auth.log, all that. Ran ssh -vvv but nothing obvious other than the server wasn’t accepting my PKA authentication. I’m not a systems guy, but I’ve set this up often enough that I couldn’t figure out for the life of me why it kept going for password authentication.
Finally found the answer: my home directory is encrypted. SSH can’t read the ~/.ssh/authorized_keys file until I log in, so it rejects the PKA auth and goes to password.
The solution is to place the authorized_keys file in an alternative location (e.g., /etc/ssh/<username>/authorized_keys), reconfigure sshd_config to use that location, set permissions, and restart the SSHD server. It’s here, under Troubleshooting.
Here’s another post on the same topic as well.
Hope that helps somebody out. It was driving me bonkers.