First, make the dough. Combine the flour with the yeast in a bowl or stand mixer. Then add the milk, water sugar, salt and melted butter. Knead till you have a smooth, soft and elastic dough that is very slightly sticky. The gluten should develop well and your dough should pass the “window pane” test. This is important to roll the dough out thin later, without tearing it.
Shape the dough into a ball and place in a lightly oiled bowl. Cover with plastic wrap and let rise until it doubles its volume. This could take up to two to three hours.
Make the filling while the dough is rising. Grind the walnuts with the sugar till finely chopped. Remove to a bowl. Then blend the crumbled paneer, sugar, instant coffee powder, vanilla extract and enough milk to make a smooth thick cream like paste. Set aside.
Once the dough has risen, it has to be stretched. Lay out a thin cotton sheet or cloth on a wide, flat surface. You can also just use your work surface like I did. The cloth makes it easier to roll the dough later though. Sprinkle the work surface very lightly with flour.
Turn out the dough and de-gas it gently. Roll the dough out into a very thin rectangle with a rolling pin, then continue to carefully stretch with hand to about 25.5 x 18-inch (65 x 45 cm) rectangle. (The dough should be about three times as long as your pan, if using a loaf tin.)
Very gently and slowly work the dough with your hands, stretching from the center to the edges. It should remain soft and elastic and stretch without tearing as long as the gluten was developed and the process is taken slowly.
Now spread the filling. Drop spoonfuls of the coffee cream all over the dough. Smooth the cream uniformly with an offset spatula, back of a spoon or your fingertips, all over leaving a little space on the edges. Try not to stretch or tear the dough. Then uniformly sprinkle the walnut-sugar mixture over this.
Roll up the dough. Starting with the long edge, roll the dough tightly on itself, making sure that there is no gap between each layer. Continue to roll from edge to edge carefully and with the help of both hands.
Once the dough is completely rolled up, carefully pinch and seal the long edge. Shape into a circle like snail, and carefully transfer this, with both hands, into a lightly greased 8-inch cake tin. Otherwise shape the dough into an “S” and place in a loaf tin.
Cover with plastic and let the dough rise until it has puffed up somewhat and filled out the pan. This could take about an hour or so.
Bake the Povitica at 180C (350F for about 15 minutes. Then turn the heat down to 160C (320F) and bake for another 45 minutes or till done and golden brown in colour.
Remove from the oven and brush with melted and cooled butter. Let it rest in the pan for 20 minutes. Then turn out the loaf and allow to cool completely on a rack. Cut and serve with coffee or tea. This loaf will keep for a week in the refrigerator.