Quote from geringer:
I had just the opposite experience today.
After rebooting last night I was promptyed for the new TWS download. I installed it and could not log in today.
(the login window appeared and just stayed there after userid password...no TWS)
The IB site status said everything was okay.
I just installed the back level version and now I am logged in.
Build 853.8
I think maybe the new build has a problem.
I've also encountered the same problem which you described, i.e. unable to login with TWS 854.4 / Java 1.5.0_04 (tried it quickly on the "experiments" PC last week and thought I'd debug things later).
Which is why I remained with TWS 853.8 and 851.9 for my regular trading, until this happened today and I had to try every possible TWS/Java/OS combination in a very short time.
I also tried login with 854.4 but in a DIFFERENT account, which worked, so I thought (mistakenly) that it was a TWS version issue.
As Xenia pointed out, this particular issue had nothing to do with TWS/Java/etc version, but with IB itself. So I had to wait for IB to fix it from its side.
PS: IB has fixed this issue for my account (error report ticket 08:38EST and fix 10:10EST).