One 1/2-pound loaf
1/2 cup plus 2 tablespoons water
1/4 cup milk
2 tablespoons butter or margarine
1 large egg
1 teaspoon salt
2 3/4 cups bread flour
1 1/2 cups shredded sharp Cheddar cheese
2 tablespoons sugar
1 teaspoon bread machine yeast

Add ingredients to bread machine pan in the order recommended by manufacturer, adding cheese with flour.

Recommended cycle: basic/white bread cycle; light crust color setting. Do not use delayed-bake feature.

Remove from pan and cool on wire rack before serving.