In a large bowl, combine dulce de leche, full cream milk and peanuts. With a spoon, stir together until well-combined. Refrigerate for about 10 to 15 minutes to firm up a bit for easier handling.
Divide mixture into about 40 portions and roll each portion into logs of about 1-inch long. Roll pastillas in sugar until fully coated.
Wrap each pastillas with a piece of white paper (resulting into a "tube") and then wrap with the colored Japanese paper. Insert the sides of the Japanese paper into the white paper "tube" to completely seal pastillas.