Heat two cups of milk, half a cup of sugar, two tablespoons of butter, and one teaspoon of ground cinnamon in a large saucepan. Bring the mixture to a gentle simmer, making sure it does not boil over.
While the sauce is heating, sift two cups of cake flour, two teaspoons of baking powder, and half a teaspoon of salt into a mixing bowl. Rub in two tablespoons of soft butter with your fingertips until the mixture looks crumbly. Beat one egg with one cup of milk and stir this into the dry ingredients to form a soft, sticky dough.
Drop spoonfuls of the dough into the simmering milk mixture. Cover the pot with a lid and let the dumplings cook for ten to fifteen minutes without removing the lid, as this allows them to rise and stay fluffy.
Once cooked, carefully remove the dumplings and place them in a serving dish. Stir the remaining sauce until smooth and slightly thickened, then pour it over the dumplings.
Serve the souskluitjies warm, sprinkling extra cinnamon sugar over the top if you like.