Dissolve the yeast in the warm water.
Combine the yeast and water mixture with the milk, flour, sugar, salt, and olive oil in a mixing bowl. Mix until batter is smooth. Cover bowl with a dish towel and let sit in a warm place for 2 hours.
In a deep fryer place oil to a depth of 2 inches. Over medium high heat, bring oil to hot, but not smoking.
Using a deep spoon (I used a table spoon measure), place spoon first in the hot oil, then scoop a spoonful of the batter into the oil. Do this each time to prevent the batter from sticking to the spoon. The loukoumades should be oval shaped. Add enough loukoumades to fryer to almost cover surface of oil. Using a slotted spoon, remove when golden brown and let dry on a paper towel. Place them on serving platter.
In a separate saucepan, combine honey, sugar, and water. Heat pot on medium until honey flows freely and sugar is melted.
Drizzle honey syrup over loukoumades. You can also top them with sesame seeds or ground walnuts if you prefer. Makes lots. Enjoy!