I'm in the same situation, and shortening the cipher list didn't help.
I've tried via terminal with ‘ssh -c aes256-ctr host’ and by editing
/etc/ssh/ssh_config, and removing some ciphers off the cipher list. Same
result. This bug is now almost a year old. Being critical, I get the
feeling it's not having development at all, although it cripples SSH to
a halt. Can someone provide a solution for this?

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https://bugs.launchpad.net/bugs/708493

Title:
  cannot login anymore: Read from socket failed: Connection reset by
  peer

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