Combine 1/4 cup warmed water with yeast and sugar. Set aside until foamy. If your yeast does not foam up, do not proceed to the next step. This means your yeast is not active.
Once the yeast mixture is foamy combine all yeast mixture, milk, butter, egg, salt, and 2 and 1/2 cups of flour. Mix to combine, adding in additional flour until the mixture pulls away from the bowl.
Knead mixture for 7-10 minutes, or until the dough is smooth. Shape into a ball, place back into bowl, cover, and let rise for an hour, until doubled.
Place dough onto counter and divide into 8 sections. Shape each section into a ball and place onto a lined baking sheet. Cover and allow to rise for 30 minutes.
Place dough onto individual parchment squares, cover, and let dough rise for another 30-60 minutes.
Cream Cheese Filling
Preheat oven to 375F.
Add all the cream cheese filling ingredients into a medium sized bowl and mix to combine. The mixture should be smooth and creamy.
Make Crumb Topping
Combine all crumb topping ingredients in a bowl. Mix until crumb-like texture.
Assemble Danishes
Using your fingers create a well in the center of each dough ball, leaving about 1/2" around the edge.
Add a scoop of the cream cheese mixture to the center well of each danish and top with a sprinkling of crumb topping.
Bake at 375F for 25-30 minutes and allow to cool for at least 10 minutes before consuming.