Dissolve the sugar in the ¼ cup water. Sprinkle the yeast over the water and let ferment and bubble.
In a large bowl combine the yeast, flour, salt, olive oil, egg, and warm milk. Knead until a soft dough is formed. Dough will be slightly sticky, so always make sure your hands have a little olive oil on them.
Lightly grease the same bowl with olive oil. Return the dough to the bowl, cover with a clean cloth and leave in a warm dry place for at least 2 hours, until doubled.