The workaround suggested by Patrick Dessalle on 2011-07-07 worked for me
as well.

Inspecting the saved passwords with Seahorse, I found out that the
*account name, not the password* had been saved as "IM account password
for jabber". No wonder it could not authenticate.

After deleting it, the correct "application password" is saved.

Installed software:

ii  empathy              3.2.0.1-0ubuntu1.1   GNOME multi-protocol chat and 
call client
ii  empathy-common       3.2.0.1-0ubuntu1.1   GNOME multi-protocol chat and 
call client (common files)
ii  telepathy-gabble     0.13.5-0ubuntu2      Jabber/XMPP connection manager

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https://bugs.launchpad.net/bugs/754569

Title:
  Empathy does not support Google Application- Specific Passwords

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