What can you use instead of powder milk in a recipe?

It depends on whether the recipe calls for powdered milk dissolved in water, or just the powder.

If it is dissolved in water, then yes, you can use real milk instead. However, you're going to have to add a little sugar or vanilla to get the same taste, because powdered milk is a little sweeter than regular.

If the recipe calls for the powder only, I wouldn't recommend substituting it. Think about it - with the powdered milk, something dry gets added to the recipe. With regular milk you'll probably water it down.