The American Academy of Pediatrics (AAP), in the September 2006 issue of its journal Pediatrics, supports the use of dairy by lactose intolerant children.
Dr. Melvin B. Heyman, author of the article, says that just because a child is lactose intolerant, does not mean that they should avoid dairy altogether. Many lactose intolerant people can consume small amounts of dairy. 
Heyman says that dairy consumption is important, especially for children, because of its high calcium content. The calcium is, in turn, important for stengthening growing bones. "If dairy products are eliminated," the article says, "other dietary sources of calcium or calcium supplements need to be provided."
Lactose intolerance is a condition, present in the majority of human population above the age of infancy, due to which the body cannot tolerate lactose, a sugar present in milk and other dairy products. Lactose intolerance causes a range of unpleasant abdominal symptoms, including stomach cramps, bloating, flatulence and diarrhea. 
As lactose intolerance is inherent, its prevalence varies by ethnic group. For example, while only 12% of American Caucasians have it, its prevalence is 75% among African Americans, 93% among Chinese, 60%-80% among Ashkenazi Jews,and 100% among American Indians. Many people do not realize that they have this condition simply because they have eaten dairy all their lives and view the symptoms of lactose intolerance as "normal". 
Physicians Committee for Responsible Medicine (PCRM) has long stated that the risks of consuming dairy far outweigh the benefits. According to PRCM's fact sheet, called "Parents' Guide to Building Better Bones", there are many healthy ways of getting enough calcium and promoting bone health. Many foods contain calcium, not just dairy. Also, it is important to consider the amount of calcium absorbed, not just the amount of calcium present in a food. For example, more than three times as much calcium is absorbed from one serving of Total Plus cereal as from one serving of 2% milk. 
PCRM promotes a strictly vegetarian diet. Despite its name, it claims only 5 percent of its members as physicians. PCRM has also been accused of having links with animal rights "extremists", in particular Jerry Vlasak, a former PCRM spokesman who called for the murder of scientists who use animals in research.
The report in News-Medical.Net says that Ann Marie Krautheim, with the National Dairy Council, a dairy lobbying group, says 
she hopes the report will educate parents on how to continue to include dairy in the diets of children sensitive to lactose and also help improve their nutrient intake. Krautheim says calcium-fortified beverages and other foods which seek to provide an alternative source of calcium, do not provide an equivalent nutrient package to dairy foods such as milk, cheese and yogurt.

 – News-Medical.NetThis last statement, however, that dairy products are superior to calcium-fortified foods, is not supported by the article in Pediatrics.
Heyman MB. Lactose intolerance in infants, children, and adolescents. Pediatrics, 2006; 118(3): 1279-86. PubMed
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American Academy of Pediatrics supports dairy for lactose intolerant children