Apple Watch won’t unlock with iPhone after updating

Seems to be a bug:

...

When you have Unlock with iPhone turned on, unlocking your iPhone unlocks your Apple Watch as long as you're wearing it. An issue in iOS 14.7 affects the ability of iPhone models with Touch ID to unlock Apple Watch.

If you experience this issue, just type the passcode directly on your Apple Watch to unlock it. This is required only one time, as long as you keep your Apple Watch on your wrist. If you forgot your passcode, you need to reset your Apple Watch.

This issue will be addressed in an upcoming software update.

...

copied from: If your iPhone doesn’t unlock your Apple Watch after updating to iOS 14.7 - Apple Support

I just bought a new watch because my series 3 would not unlock. And now my new series 6 will not unlock. And no one including the person who helped me unlock my old watch by unpairing and repairing on chat told me about the software issue. Sigh. Very frustrating. I hope this watch unlocks after the software update.

I have this problem. It used to happen once in a while, and rebooting the phone would fix it. After updating to 14.7.1, which purportedly fixes the problem with a TouchID phone, my FaceID phone would not unlock the watch. Rebooting did not help. I finally dove in and did the unpair/repair dance, which fixed it for about 2 days. But it is once again broken. I am not very willing to keep unpairing and repairing to keep this working, so really hope that is not the solution going forward. It's painful to re-add all my credit cards to Apple Pay after unpair/repair. Especially as one of my cards requires a call to the issuing bank.

I think an obscure bug with FaceID was introduced when Apple fixed the TouchID problem. But evidently it's an obscure one or else many more people would be complaining about this.

Any ideas from anyone would be welcome. I may go ahead and do the unpair deal again, but I'm not eager to dive into that if there is any other way.

I am using iPhone X Max 14.7.1 & Watch series 6 7.6.1.

Cannot open watch with iPhone. All settings as they should be. Must use passcode.

This bug is the most annoying thing to crop up in my iPhone, Apple ecosphere.

I also have this problem with an iPhone with FaceID and updated to 14.7.1, so this has not been fixed.

After working with AppleCare support, several unpairing/repairing/restore procedures, the unlock feature is working again. Not sure what we did specifically that fixed it, though.

Same here for me and my wife’s watch

iOS 14.7.1 fixed it for my iPhone/Apple Watch.

I did not unpair or reset the Apple Watch, only updated the iPhone to iOS 14.7.1 and it started working right after that.

Apple released a fix to IOS 15 yesterday October 1, 2021, that fixed the problem.