3/4 cup milk
2 x 7g packets dry yeast
1 cup caster sugar
pinch of salt
4 1/2 cups plain flour
220g butter, chilled and cut into small cubes
3 eggs, lightly beaten
2 teaspoons cinnamon
vegetable or light olive oil, for frying
Heat milk over low heat until just warm (overheating will kill yeast). Remove from heat and pour into a jug. Add yeast, 2 tablespoons caster sugar, and salt. Whisk with a fork until well-combined. Allow to stand for 10 minutes.
Sift flour into a large bowl. Add butter and rub in with fingertips until mixture resembles fine breadcrumbs. Add 1/4 cup caster sugar, stirring until well-combined. Make a well in the centre. Add yeast mixture and eggs. Mix until well-combined. Drop mixture onto a floured surface. Knead for 10 minutes. Place dough into a lightly oiled bowl and cover with plastic wrap. Stand in a warm place for 45 minutes.
Combine remaining caster sugar and cinnamon on a plate. Knock down dough and turn onto a lightly floured board. Cut dough in half and knead each piece for 5 minutes. Roll one piece out to 1 1/4cm thick. Cut 8cm circles with a biscuit cutter. Using a 4cm round cutter, cut out centre of each circle to form donuts. Continue with remaining dough.
Half-fill a frypan with oil. Heat over medium heat until oil is hot. Add 2 to 3 donuts at a time, cooking for 2 to 3 minutes on each side or until golden. Remove with a slotted spoon and drain on paper towels. Toss donuts, one at a time, in cinnamon sugar until well-coated.