SMTP ERROR: Password command failed

I’m using WP Mail SMTP and have the following error when trying to send a test mail to my Office 365 mailbox:

Versions:
WordPress: 4.9.3
WordPress MS: No
PHP: 5.6.23
WP Mail SMTP: 1.2.5

Params:
Mailer: smtp
Constants: Yes
ErrorInfo: SMTP connect() failed. https://github.com/PHPMailer/PHPMailer/wiki/Troubleshooting
Host: smtp.office365.com
Port: 587
SMTPSecure: tls
SMTPAutoTLS: bool(true)
SMTPAuth: bool(true)

Server:
OpenSSL: Yes
SMTP Debug:
2018-02-06 13:48:44 Connection: opening to smtp.office365.com:587, timeout=300, options=array (
)
2018-02-06 13:48:45 Connection: opened
2018-02-06 13:48:45 SERVER -> CLIENT: 220 CWLP265CA0028.outlook.office365.com Microsoft ESMTP MAIL Service ready at Tue, 6 Feb 2018 13:48:44 +0000
2018-02-06 13:48:45 CLIENT -> SERVER: EHLO http://www.adminwiz.co.za
2018-02-06 13:48:45 SERVER -> CLIENT: 250-CWLP265CA0028.outlook.office365.com Hello [41.76.215.246]
250-SIZE 157286400
250-PIPELINING
250-DSN
250-ENHANCEDSTATUSCODES
250-STARTTLS
250-8BITMIME
250-BINARYMIME
250-CHUNKING
250 SMTPUTF8
2018-02-06 13:48:45 CLIENT -> SERVER: STARTTLS
2018-02-06 13:48:46 SERVER -> CLIENT: 220 2.0.0 SMTP server ready
2018-02-06 13:48:46 CLIENT -> SERVER: EHLO http://www.adminwiz.co.za
2018-02-06 13:48:46 SERVER -> CLIENT: 250-CWLP265CA0028.outlook.office365.com Hello [41.76.215.246]
250-SIZE 157286400
250-PIPELINING
250-DSN
250-ENHANCEDSTATUSCODES
250-AUTH LOGIN XOAUTH2
250-8BITMIME
250-BINARYMIME
250-CHUNKING
250 SMTPUTF8
2018-02-06 13:48:46 CLIENT -> SERVER: AUTH LOGIN
2018-02-06 13:48:46 SERVER -> CLIENT: 334 VXNlcm5hbWU6
2018-02-06 13:48:46 CLIENT -> SERVER: aW5mb0BhZG1pbndpei5jby56YQ==
2018-02-06 13:48:46 SERVER -> CLIENT: 334 UGFzc3dvcmQ6
2018-02-06 13:48:46 CLIENT -> SERVER: UDQkJHcwcmQ=
2018-02-06 13:48:53 SERVER -> CLIENT: 535 5.7.3 Authentication unsuccessful [CWLP265CA0028.GBRP265.PROD.OUTLOOK.COM]
2018-02-06 13:48:53 SMTP ERROR: Password command failed: 535 5.7.3 Authentication unsuccessful [CWLP265CA0028.GBRP265.PROD.OUTLOOK.COM]
2018-02-06 13:48:53 SMTP Error: Could not authenticate.
2018-02-06 13:48:53 CLIENT -> SERVER: QUIT
2018-02-06 13:48:53 SERVER -> CLIENT: 221 2.0.0 Service closing transmission channel
2018-02-06 13:48:53 Connection: closed
2018-02-06 13:48:53 SMTP connect() failed.

What I’ve checked and done:
1. Made sure that the ISP has opened the correct port for Office 365
2. Made sure that outbound email on the ISP’s side is enabled
3. Checked that the username and password is correct in the settings by logging into Office 365 with the same credentials (it works)
4. Made sure that email routing on the server is set to Remote Mail Exhange
5. Updated the WP Mail SMTP plugin to the latest version
6. Uninstalled and reinstalled the plugin, but the results are the same
7. Used another Office 365 account, but still the results are the same
8. Changed the port to 25 instead of 587, but still the results are the same

I’m out of ideas, I’ve followed all suggestions that I came across and still nothing. My ISP has now suggested that I start digging around in Office 365, what to look for I’m not sure, and check my credentials, which I’ve checked and it works when logging in through microsoftonline.com.

Please any suggestions would be greatly appreciated!

Thanks in advance.

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