Heat milk, water, and butter to 120°.
In large mixing bowl, combine 3/4 cup flour, sugar, salt, and undissolved yeast.
Gradually add milk mixture to dry ingredients and beat for 2 minutes at medium speed.
Add 1/4 cup flour; beat at high speed for 2 minutes.
Add additional flour to make soft dough.
On floured board, knead for 2 to 3 minutes.
Divide dough into 12 equal pieces; shape into balls.
Place in greased 8" round baking pan.
Pour a 1" depth of boiling water into large pan or bottom rack of cold oven.
Set rolls on rack above water; cover with plastic wrap and towel.
Close oven door; let rise 30 minutes.
Uncover rolls; remove pan of water.
Bake at 375° for 20 to 25 minutes or until golden brown.