One of the most commonly cited harmful effects of milk powder is the presence of oxidized cholesterol. However, there aren’t any notable clinical studies that clearly identify how much of a health risk this is or isn’t. This is a subject of enough controversy.

Here is a list of some healthy substitutes for powdered milk which you can incorporate into your diet :

• Milk (Non Vegan) – Milk itself can be a substitute for the milk powder. After all, the formulas for the reconstitution of milk using the milk powder is 1/4 dry milk and 1 cup water.
• Soy Milk Powder (Vegan) – To replace with soy milk powder in your recipe, add an equal amount of soy milk that the recipes need. You can mix soy milk powder with both warm and cold water.
• Rice Water Powder (Vegan) – The best point of rice milk powder is that it does not contain soy, gluten, dairy or lactose. It is the best substitute for those with food allergies, dairy intolerances.
• Coconut Milk or Its Powder (Vegan) – If you live in South Asia or have every tasted their authentic food, then you are must aware of the taste of coconut milk. It is very popular in Thai, South Indian or Bengali cuisine.
• Potato Milk Powder (Vegan) – Potato milk powder can be a solution for those with soy and gluten intolerances. The powder can be found as original or flavoured.

Reference : https://naturallydaily.com/substitute-for-powdered-milk/