Dissolve yeast in 1/4 cup water; let stand 5 minutes. Combine milk, butter, honey, salt, and remaining water in a bowl; mix well. Cool. Add yeast mixture; mix well. Gradually stir in flour.
Turn dough out onto a floured surface, and knead 8 to 10 minutes or until smooth and elastic. Place in a well-greased bowl, turning to grease top. Cover and let rise in a warm place (85°), free from drafts, 50 to 6)0 minutes or until doubled in bulk.
Punch dough down, and place in two well-greased 8 1/2- x 4 1/2- x 3-inch loaf pans. Brush top with melted butter. Cover and let rise in a warm, draft-free place (85°) 1 hour or until doubled in bulk. Bake at 350° for 55 to 60 minutes or until loaf sounds hollow when tapped.