Constant Logon Failure – Outlook 2011 Mac

Running Outlook 2011 for Mac with Office 365 email account. Has been set up and running properly for months. All of a sudden on Friday 12/5/14 I started getting a constant Logon Failure.

Now every time Outlook goes to sync with Office 365 I get a Logon Failure:

Mail could not be received at this time.

The server for account [my account] returned the following error "Logon failure: unknown user name or bad password." Your username/password or security setting may be incorrect. Would you like to try re-entering your password?

I re-enter my password and logon is successful. Sync is completed and I receive incoming mail. However, the next time Outlook goes to sync with the Office 365 server, the same problem happens. So, I am basically re-entering my password every 2 minutes or so. I also have my credentials stored in my keychain, but Outlook still asks me to re-enter my password every time.

Has anyone else experienced this issue? How did you solve it? 

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Office 2011 for Mac

Outlook 14.4.3

Mac OSX 10.8.5

Office 365