My users get exactly the same error in my App (Mr. Reader) and it started 2 days ago.
I’ve reported it to api@twitter.com but no response so far.
Twitter, please re-activate xAuth. Thanks!
Yes Oliver, sadly Mr. reader can’t connect to twitter anymore.
Twitter, please re-activate xAuth 
The users of my app (FriendTrend for iOS) have started reporting the same problem with logging in 
the xAuth error occured to me since two days. Nothing is working to fix that issue. Now I use River of News at my IPad 2. This App. Is working quite well. Why does Twitter changed the permissions without making an application to the developers of the Apps. ? This is not a professional act. Please improve your behavior. Thx Maik
janole
#6
Hi,
I’ve got the same here, too, for my app Gravity. Would be nice if Twitter could fix this quickly.
@janole
episod
#7
If you’re experiencing this issue, write in to api@twitter.com from the email address associated with the application. Include the consumer key effected and the API policy team wil try to get you set back up as quickly as possible. When you get an email back from the automated system, be sure and reply to that email as well.
When xAuth was originally released, some permissions were granted in a less sophisticated way as we developed soon after. Due to some recent changes, those older grants need to be reconfirmed and upgraded.
@episod Thanks for your comment, but i’ve already send 3 mails to api@twitter.com without success. The first one was on March 22, 2012. We will see if a human responds someday or fixes it silently. 
P.S. Why don’t you communicate such important (at least for me and my users) changes?
My app appears to be working now (after emailing api@twitter.com a few hours ago).
It seems that it is working now.
trevin
#12
We just started seeing failures a few days ago as well. I’ve emailed api@twitter.com and been waiting for a reply and help resolving this. No luck so far.
This is unfortunately impacting our app that has been using xAuth for nearly 2 years 
glyeet
#13
My app seems to be working now as well. I mailed api@glympse.com several days ago.
Yep this is affecting us as well.
My app is also affected by this issue.
episod
#16
If you’re still experiencing this issue, write in to api@twitter.com from the email address associated with the application-owning account. Include your consumer key (not the secret) and explain that you were an early grantee of xAuth and need your access upgraded to the current permissioning system. Once you’ve sent this email you should get an auto-response back that you’ll also need to respond to get your high priority ticket fully in the system. Thanks!
It is working now.
I’ve sent an email then it works!
when activated my cnsumer key
I have the same issue.Please advise.