Combine water and milk; heat to scalding.

Mix sugar, margarine, salt and egg until creamy. Stir hot milk mixture into creamed until blended. Add half and beat until ingredients, batter is smooth.

Dissolve yeast in lukewarm water and sugar. Add yeast mixture to batter, stirring in thoroughly. Add rest of flour, kneading to a smooth elastic dough. Let rise in a greased and covered bowl until doubled in size (45 minutes to an hour.)

Shape into rolls, placing on a greased sheet pan or muffin tin. Let rise until double again.