Updating database user password on MySQL 5.7 leads to "double hash"

How to reproduce issue

Using ISPConfig 3.1 and MySQL 5.7 try to update database user password. The password get "double hashed" (eg. setting password "SuperStrongPWD" get saved as "*3393F833E1C626709E4230489AF71599FF3B6496" instead of "*CC37CB1BF2C651C2AA0CC64461E3C73E816D8F39").

Creating new database user is not affected by this issue.

Cause

ISPConfig is using SET PASSWORD to change database user password. Starting from MySQL 5.7.6 syntax for SET PASSWORD were changed from:

SET PASSWORD FOR user = "password_hash";

to:

SET PASSWORD FOR user = "password";

But ISPConfig is still sending "password_hash" instead of "password" causing password to get hashed again.

Temperory workaround

Delete, create user with desired password and attach him to desired databases.