Ssh – how to solve the error: “ssh_exchange_identification: connection closed by remote host”

The error:

ssh_exchange_identification: Connection closed by remote host

has many proposed solutions but none seem to solve my problem.

This is what I want to accomplish:

I have a server (10.0.0.5) SSH on it.
The server has the following users and their shells:

passport , shell=/bin/false
user1, shell=git-shell
user2, shell=git-shell
me, shell=bash

The sshd_config file, has the following entry at the end:

AllowTcpForwarding no
      Match User passport,user1,user2
      AllowTcpForwarding true
      PermitOpen 10.0.0.5:8080
      PermitOpen 10.0.0.5:22

I also enabled public key authentication.
The goal is to disable all tcp forwarding from SSH and only allow the users mentioned above to have forwarding on two ports:

- SSH
- a web server

In my /etc/hosts.allow and .deny files there are no entries.

I setup the appropriate authorized_keys file (just the ssh-rsa …) in /home/passport/.ssh/authorized_keys.

From a Windows machine, try to SSH:

ssh passport@10.0.0.5 -N -L 22:10.0.0.5:22 -L 8080:10.0.0.5:8080

This works fine, when "I try to surf to http://127.0.0.1:8080"
This means my port forwarding works fine.

Now, I want to try to SSH through that tunnel and use 'user1':

ssh -N user1@127.0.0.1

At this moment, I get:

ssh_exchange_identification: Connection closed by remote host

Whereas, if I just SSH directly from my Windows machine, I succeed:

ssh -N user1@10.0.0.5

I don't know why it does not work.

I inspect /var/log/auth.log and observe:

Feb  4 10:28:23 myhost sshd[2097]: debug1: server_input_channel_open: ctype direct-tcpip rchan 257 win 16384 max 16384
Feb  4 10:28:23 myhost sshd[2097]: debug1: server_request_direct_tcpip: originator 0.0.0.0 port 0, target 10.0.0.5 port 22
Feb  4 10:28:23 myhost sshd[2097]: Received request to connect to host 10.0.0.5 port 22, but the request was denied.
Feb  4 10:28:23 myhost sshd[2097]: debug1: server_input_channel_open: failure direct-tcpip

I try to flush the iptables with -F and try restarting sshd, but still I get a connection closed error.

• Why can't I ssh via the tunnel?

• The reason I created "passport" user is to allow users to remotely login to my network.
  They will be able to use the web server.

Now if they want to use GIT, they will use the following for example:

git clone ssh://user1@127.0.0.1/repos/repo.git

I am running Debian 6, with Linux 2.6.32 and OpenSSH 5.5p1

Please advise on how to solve my problem. I tried all of the solutions listed for the question with the same title as my question but to no avail.