Preheat the oven to 375F. In a large bowl, stir together 1 cup of the sugar, the flour, baking powder and salt.
In a small bowl, stir together the egg yolks, lemon zest and juice, milk and butter. Add to the dry ingredients, mixing just until combined.
In a clean glass or stainless steel bowl, beat the egg whites until soft peaks form, gradually add the remaining 1/2 cup sugar, beating constantly until the mixture stands in stiff peaks. Gently fold into the lemon batter, and scrape into a buttered baking dish.
Set the baking dish into a larger dish and fill halfway up the side with water. Bake for 45 minutes, until golden and springy to the touch. Serve warm or cold.