I am facing this problem when I try to publish my web application on Windows Azure via Visual Studio 2010. I am trying by right click on project and select publish and importing
I do not save the password in my publish profile. Even after checking and double checking the password from the portal and entering it when prompted, the publish failed. I knew the problem had something to do with the password because I could enter any bogus password and still get the same exact publish failed error.
What I did was click "Configure" on the publish tab of my project and click on "Validate Connection" on the "Connection" tab after entering the credentials again.
It was able to validate successfully and all subsequent publishes have been successful as well.