This may or may not be the cause of your issues, but LTI tends to have issues with browsers that block third party (or cross-site) cookies. This setting is turned on in Safari by default, so usually that's the browser that experiences these sorts of issues.
You can check your cookie settings in Firefox to see if this is enabled: https://support.mozilla.org/en-US/kb/third-party-cookies-firefox-tracking-protection
If this is the cause of your issue, then having the LTI link open in a new window usually gets around this since you're not embedding one website within another. I'm not familiar with Canvas, but there should be a setting for this.
In reply to Danny Glin
Re: Canvas LTI authentication broken after upgrade to 2.18
by Tural Hamzayev -Thanks for comment,
I checked with different browsers all had the same. Moreover when Grade submission is disabled student can login, the issue happens only when Grading is enabled either "homework" or "course".