This is quite a common issue, but thankfully very easy to solve
You just need to enable Shell access for that particular user. You do this in the panel at Users -> Manage Users then click Edit next to the appropriate user. You should then see the option to Enable ssh/telnet?
It may take a little while for the change to take effect.
Save [color=#CC0000]$50[/color] on DreamHost hosting using promo code [color=#CC0000]SAVEMONEY[/color] ( Click for promo code details )