Use skim milk. Any paper works so long as it is not waxed paper.
I stopped using milk because of the mess. If I want to label a few bottles I just put a piece of clear tape on each edge of the label and done. It might not look quite as professional but it sure is easier to apply and remove.
Next up: Amber Ale
Primary 1&2: 90 Min IPA clone
Primary 3&4: Belgian Wit
Keg #1: White Mosaic Pale Ale
Keg #2: Empty
Drinking: Amber Ale, White Mosaic Pale Ale