Stir yeast and warm water together in a cup and let it stand for 5 minutes.
In a large bowl, stir together the yeast mixture, evaporated milk, sugar, salt and egg until well blended.
Gradually stir in flour until a soft dough forms.
Cover the dough and chill overnight (at least 8 hours).
When you are ready to make the beignets, take the dough out and place on a well-floured surface.
Knead the dough 5-6 times and then roll into a 15x15 inch square.
Cut your dough into 2-3" squares.
Fill a large pot with oil and heat it to 375 degrees.
Once the oil it hot, carefully place 5-6 squares a dough (depending on the size of your pot) into the oil. Don't let them clump together.
Fry for about 1 minute on each side.
Drain beignets on paper towels and sprinkle with powdered sugar while warm.
Serve immediately.