In a large bowl, dissolve yeast and 1 teaspoon sugar in 1/2 cup warm water; let stand 5 minutes. Add milk, salt, egg, oil, 2 cups flour and remaining water and sugar. Beat on medium speed until smooth. Stir in enough remaining flour to form a soft dough.
Turn dough onto a floured surface; knead until smooth and elastic, about 6-8 minutes. Place in a greased bowl, turning once to grease the top. Cover with plastic wrap and let rise in a warm place until doubled, about 45 minutes.
Punch dough down. Turn onto a lightly floured surface; divide into two portions. Roll each portion to 1/2-in. thickness. Cut with a floured 2-1/2-in. biscuit cutter. If desired, brush with butter.
Using the dull edge of a knife, crease each slightly off-center. Fold at the crease. Press edges together lightly. Place 2 in. apart on greased baking sheets. Cover with a kitchen towel; let rise in a warm place until doubled, about 30 minutes.
Preheat oven to 375°. Bake 10-15 minutes or until golden brown. Remove from pans to wire racks to cool.Yield: 2-1/2 dozen.