Powdered milk is a means of preserving the dairy product, and offers ease of transport. It does not need to be refrigerated and has a longer shelf life. It can come in non-fat, whole and buttermilk form. However, it is not generally a staple of most food pantries and substitutions must often be made in recipes that call for it.
If a recipe contains liquids that can be substituted along with the milk powder, liquid milk is the best substitution and will create the most authentic results. For every 1/4 cup of milk powder called for, add one cup of liquid milk. That cup of milk not only substitutes for the milk powder, but also for a cup of liquid that the recipe calls for, whether it is juice, water or any other liquid.
Other Powdered Milks
In recipes that call for powered milk and have no liquids you need another form of powder. It does not have to be lactose based; one of the best substitutions is coconut milk powder. The proportions of the powder substitution should be equal: 1 cup coconut milk powder equals 1 cup powdered milk.
Liquid Non-Dairy Milks
You can use coconut milk, soy milk and almond milk in lieu of powdered milk. You can do this with a recipe that calls for reconstitution of the milk powder or uses other liquids that you can replace with liquid milk. The ratio for using liquid non-dairy milk in lieu of powdered milk is the same as substituting regular milk. Replace 1/4 cup of powdered milk with 1 cup of non-lactose milk. However, as with the substitution of regular milk, remove one cup of liquid called for in the recipe.
You can substitute coffee creamer in recipes that have no liquids. Those who do not have dairy alternatives on hand and are lactose intolerant, can often use water or a mild juice if liquids are called for in the recipe. If baking, add one tablespoon of mayonnaise to the water or juice.
References and ResourcesDutch Oven Dude: Cooking Measurements
Joy of Baking: Ingredient Substitution