Combine peaches and 1/2 cup sugar; let stand 10 minutes.
Melt butter in a 12- x 8- x 2- inch baking dish; set aside.
Combine flour, 1 cup sugar, baking powder, and salt in a medium mixing bowl; add milk, mixing well. Pour batter into prepared baking dish (do not stir). Pour peach mixture evenly over batter.
Bake at 375° for 50 minutes or until golden brown. Serve warm with ice cream.
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