The report says that with the foot and mouth disease now behind us and BSE fears no longer putting us off all things cattle, the UK is guzzling milk in as many forms as it can find.
And while butter and liquid milk may be falling in popularity, cheese is on the up according to the survey.
Datamonitor said that competition from alternative breakfast and cereal bars, and the increasing availability of dairy-free milk products, will lead to natural cheese overtaking liquid milk as the leading dairy sector by 2006.
Consumption of fats and spreads is expected to drop as awareness of healthy eating continues. But despite this shift towards healthy eating the UK ice-cream market is one of the largest in Europe with luxury brands such as Häagen-Dazs continuing to grow.
Liquid milk, yogurt and ice cream, the three big product s, are predicted to reach sales of £1.7bn, £800m and £1.7bn respectively by 2006.