Capistrano still asks for the 1st password even though I’ve set up an ssh key

Background: I've setup an ssh key to avoid having to use passwords
with capistrano per http://www.picky-ricky.com/2009/01/ssh-keys-with-capistrano.html.
A basic ssh to my server does work fine without asking for passwords.
I'm using "dreamhost.com" for hosting.

Issue – When I run 'cap deploy' I still get asked for the 1st password
(even through the previous 2nd and 3rd password requests are now
automated). It is the capistrano command that start with "git clone –
q ssh:….." for which the password is being requested.

Question – Is there something I've missed? How can I get "cap deploy"
totally passwordless?

Some excerts from config/deploy.rb are:

set :use_sudo, false
ssh_options[:keys] = [File.join(ENV["HOME"], ".ssh", "id_rsa")]
default_run_options[:pty] = true

thanks

PS. The permissions on the server are:

drwx------    2 mylogin pg840652  4096 2010-02-22 15:56 .ssh
-rw-------    1 mylogin pg840652  404 2010-02-22 15:45 authorized_keys