When you setup a link between a Life Cycle Services (LCS) project and a Visual Studio Online (VSO) project, you need to specify some "Alternate authentication credentials" to login to VSO from LCS.
On VSO you setup these credentials by going to "My profile \ Security \ Alternate authentication credentials", tick the "Enable alternate authentication credentials" box an enter the alternate user id and password you want to use from LCS.
On VSO you setup these credentials by going to "My profile \ Security \ Alternate authentication credentials", tick the "Enable alternate authentication credentials" box an enter the alternate user id and password you want to use from LCS.