Combine milk, water and butter.
Combine flour, salt and sugar in separate bowl.
Add ingredients to your bread machine in order your manufacturer suggests. Mine is wet, flour mixture, then yeast.
If you are going to use the bread machine to take it through the baking cycle set your machine to a Basic bread cycle.
If you want to shape and bake it yourself set your machine to the dough cycle.
Remove the dough after the 2nd knead. Set a timer so you know when to interrupt the cycle. (mine is after 30 minutes). Spray a loaf pan with cooking spray. Remove the dough. It will be very sticky so use a bit of flour on your hands and work surface so you can shape into a loaf in the pan.
Cover with a clean towel and allow dough to rise in the loaf pan for 60 minutes.
Heat oven to 375 degrees and bake about 30 minutes. The loaf should sound a bit hollow when you tap it on the top. If you have an instant read thermometer check for internal temperature of 190° F.
Allow bread to cool completely before slicing. Use or freeze within a day or two.