Outlook and Two-Step Authentication for Outlook.com and Hotmail accounts

After setting up Two-Step Verification on Outlook.com, I’ve been unable to connect Outlook with my Outlook.com account and am repeatedly being prompted for my password.

I know I am putting in the correct password as it still works when I try to log on to the website.

How can I gain access to my Outlook.com account again from Outlook without disabling the Two-Step Verification?