sftp subsystem request failed

subsystem request failed on channel 0
Couldn't read packet: Connection reset by peer

This happened when using sshd chrooting on Linux.

This was sorted after changing

Subsystem sftp /usr/lib/openssh/sftp-server

to

Subsystem sftp internal-sftp

REFERENCE:
http://forums.debian.net/viewtopic.php?f=5&t=42818