In a large mixing bowl, combine all-purpose flour, sugar, yeast, and salt. Heat the milk until warm (about 110°F), then add beaten egg and mix. Gradually incorporate the wet mixture into the dry ingredients, stirring until combined. Knead the dough on a floured surface for about 5 minutes until smooth and elastic, then shape into a ball.

Place the dough ball in a lightly greased bowl, covering it with a damp cloth or plastic wrap. Allow to rise in a warm, draft-free area for 1.5 to 2 hours, or until doubled in size.

Once risen, punch down the dough, roll it out to about ½ inch thick, and cut into 2-inch squares. Arrange on a floured baking sheet.

In a deep Dutch oven, pour in enough oil for deep frying and heat it to 370°F, monitoring with a deep-fry thermometer.

Carefully place a few dough squares into the hot oil and fry for 1-2 minutes on each side until golden brown. Use a slotted spoon to drain on paper towels.

While warm, transfer fried beignets to a plate and generously dust with powdered sugar. Serve immediately.