How to fix "550 Permission denied" with vsftpd when using virtual users

Using vsftpd 2.0.5-2 on Debian Etch I was able to set up a virtual user using pam_pwdfile.so by following a combination of these pages

http://howto.gumph.org/content/setup-virtual-users-and-directories-in-vsftpd/

ftp://vsftpd.beasts.org/users/cevans/untar/vsftpd-2.0.6/EXAMPLE/VIRTUAL_USERS/README

Logging in and listing files worked but uploading did not work. This turned out to be a problem it was easy to find other reports of in mailing lists and forums but the solution was elusive until I finally read the man page for vsftpd (http://vsftpd.beasts.org/vsftpd_conf.html). The solution was to set virtual_use_local_privs=YES.

From the man page:

virtual_use_local_privs

If enabled, virtual users will use the same privileges as local users. By default, virtual users will use the same privileges as anonymous users, which tends to be more restrictive (especially in terms of write access).

Default: NO

Learning take-away: Read the official documentation before asking Google for a quick fix.