In a wide, nonstick skillet over low heat, combine milk and ⅔ cup of the sugar, and stir until sugar is dissolved.
Cook, regularly stirring and scraping sides and bottom of the pan, for about 1 to 1 ½ hours or until milk is reduced and mixture turns into a thin paste.
Add lime zest and stir to combine.
Add butter and powdered milk and stir until smooth and well combined.
Continue to cook for about 3 to 5 minutes or until the mixture begins to pull from sides of the pan and turns into a soft dough.
Transfer mixture into a lightly oiled plate and allow to cool to touch.
Divide mixture into about 40 portions and roll each portion into logs of about 1-inch long.
Roll pastillas in the remaining ⅓ cup sugar until fully coated.
Wrap individually in Japanese paper.
Video
Notes
If the mixture is too soft or sticky to roll, chill for a few minutes to firm up.