Why am I getting the error "WARNING server login failed..." when using PGBouncer on Heroku Postgres

Issue

When trying to connect to Heroku Postgres with a custom PGBouncer installation, all connections fail with an error like

WARNING server login failed: FATAL password authentication failed for user "..."

Note that this does not apply when using the Heroku PGBouncer buildpack.

Use the Heroku PGBouncer buildpack
Use the Postgres md5-hidden password format when configuring PGBouncer
Wait for PGBouncer to merge this pull request which works around the issue by increasing the password buffer size and use a version that includes the fix [UPDATE: merged]

Any of the above should work around the issue

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