We consider a new cosmological model (named $\tilde\Lambda$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) data set to constrain the model, we find that the $H_0$ 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 favoured by the data, compared with $\Lambda$CDM. We find that when the $H_0$ and $S_8$ data are added into the data combination, the situation is significantly improved. In the CBS+$H_0$ case, we find that the model relieves the $H_0$ tension to $0.47\sigma$, and in this case, the model is favoured over $\Lambda$CDM. In the CBS+$H_0$+$S_8$ case, we get a synthetically best situation in which the $H_0$ and $S_8$ tensions are relived to $0.72\sigma$ and $2.11\sigma$, respectively. In this case, the model is most favoured by the data. Therefore, such a cosmological model can greatly relieve the $H_0$ tension, and at the same time, it can also effectively alleviate the $S_8$ tension.