  We consider a new cosmological model (called $\tilde\Lambda$CDM) in which the
vacuum energy interacts with matter and radiation, and test this model using
the current cosmological observations. Using the CMB+BAO+SN (CBS) dataset to
constrain the model, we find that $H_0$ and $S_8$ tensions are relieved to
$2.87\sigma$ and $2.77\sigma$, respectively. However, in this case, the
$\tilde\Lambda$CDM model is not favored by the data, compared with
$\Lambda$CDM. We find that when the $H_0$ and $S_8$ data are added to the data
combination, the situation is significantly improved. In the CBS+$H_0$ case,
the model relieves the $H_0$ tension to $0.47\sigma$, and the model is favored
over $\Lambda$CDM. In the CBS+$H_0$+$S_8$ case, we obtain a synthetically best
situation, in which the $H_0$ and $S_8$ tensions are relieved to $0.72\sigma$
and $2.11\sigma$, respectively. In this case, the model is most favored by the
data. Therefore, this cosmological model can greatly relieve the $H_0$ tension
and simultaneously effectively alleviate the $S_8$ tension.
