Peel the potatoes, cut into small 1/2 in (1.25 cm) dice. Peel and slice the onion. De-rind and chop the bacon. Grease an oven-proof dish. Mix the potatoes, onion and bacon in a bowl, and put into the dish, seasoning well with the salt and pepper. Add the hot milk (enough to come halfway up the dish) and dot with the butter.
Bake in a hot oven (400F/200C/Gas mark 6), covered with a lid or foil for 45 minutes-1 hour, until the potatoes are cooked and all the milk is absorbed.
Break each egg into a cup. Remove the dish of potatoes from the oven, make two hollows in the top of the potatoes with a spoon, and slip the raw eggs into the hollows. Return the dish to the oven for 6-8 minutes until the eggs are set. Serve at once.