Depends on the condition it's in. If the milk is still in powder form and you happen to be inexplicably consuming clumps of powder, then you'd be eating powdered milk. If you rehydrated it and are consuming like you would any other beverage, then you'd be drinking powdered milk. In mostly all cases, you'd say "drinking powdered milk", because it would take some special sort of idiot to put scoops of milk powder directly into their mouth.

Neither. Though I did know a guy once who would eat spoonfuls of powdered milk. :( . In China babies usually drink milk made from powder. In China babies usually drink milk made from milk powder. In China babies usually drink milk made from powdered baby formula.

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