A lot of people who claim that they have milk allergies actually have lactose intolerance. What's the difference? Here is a good explanation:

When it comes to milk, most "allergies" are really an intolerance of lactose, which is due to a deficiency of lactase, the enzyme in the intestine that digests this milk sugar. When you are lactase deficient, you cannot digest this sugar and it passes through the small intestine intact. When it reaches the large intestine, lactose is digested by bacteria that live there causing production of gas that distends the bowel and can be painful. Additionally, the undigested sugars in the large intestine draw water into the bowel, causing diarrhea and cramps.

True allergy to milk is an allergy not to milk sugar, but to milk protein. People allergic to milk protein will get similar symptoms, but will also have blood in their stools. This is due to a completely different mechanism. The body treats the milk protein as a foreign "invader" and mobilizes an immune response to get rid of it. This results in the symptoms. It is very common to be allergic or intolerant to both milk and soy products.

In my son's case, he also developed rashes when he came into contact with milk and milk products.

Not only do the two conditions differ in the causative ingredient, they also differ in the type of milk products patients can eat. Those with lactose intolerance may find that they do not have problems when eating yoghurt, hard cheese, or small portions of ice cream. This is because such milk products have very low lactose content, having undergone fermentation. For people with true milk allergies, however, fermented milk products remain a no-no.