This works for me now,
sudo lxc-create -t ubuntu-cloud -n x1 -- -r precise --auth-key
$HOME/.ssh/id_rsa.pub
** Changed in: lxc (Ubuntu)
Status: Triaged => Fix Released
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https://bugs.launchpad.net/bugs/1079320
Title:
ssh key not correctly used in ubuntu-cloud oneiric containers
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