Milk will replace sugar as the treat's main ingredient, as the white stuff content is boosted from 26%  to 37.5%.
Nestle said the new recipe bars - with sugar cut by 0.7g - will be in stores by the end of the month.
It follows a similar move with its KitKat recipe, which increased the milk and cocoa content.
The Milkybar recipe has been the same since the bar first came into production in 1936, but is being changed as part of Public Health England's drive to reduce the amount of sugar consumed in the UK by 20%.
In April Nestle reduced the amount of sugar in its fruit pastilles by 30%.
A spokesman said the reductions in sugar would make "a positive step overall to removing sugar from the nation's diet while maintaining the taste"

The work - which began in August 2014 - has now been completed.
More specialist contractors were brought in as the work progressed and the budget began to rise.
A council spokeswoman told BBC Scotland the last agreed budget was just under £4.3m but that the final bill for the project was still being calculated.
She said: "We can confirm that the restoration of the roof of the Town House, one of Aberdeen's historic civic buildings, is now complete.
"The scaffolding erected on Union Street came down over the weekend as the repairs came to a close.
"In the past two years the project has revealed many ornate and historic features which are unique to the UK.
"As the work progressed the scope was widened to account for additional structural issues which were previously not evident in initial assessments and which led to the schedule and budget being extended.
"This included the exposure of rotten wood in the building's four towers which were found underneath the slates and lead last summer that had to be replaced."
The spokeswoman added: "We made a commitment to bring this important civic building back to life and are delighted the project has now come to a close.
"The final cost of the project is still to be confirmed."

The boarding boat at St Davids RNLI Lifeboat Station takes crew to and from its lifeboat.
But the vessel has recently become a regular sunbathing spot for a 7ft (2.13m) long bull seal.
Dai John, St Davids RNLI coxswain, said: "His presence doesn't impact on our ability to save lives at sea at all so he is a welcome visitor."
The boat is currently being kept on a mooring until the charity's new lifeboat station is completed next year.

Traffic Scotland said the crash near the Gladsmuir junction took place in weather which was causing "dangerous driving conditions".
They urged drivers to be aware of potential problems.
Police confirmed they were at the scene but said that it was too early to give details of the accident.
Milkybars are about to get milkier, as the recipe changes for the first time in 81 years.
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The final bill for repairs to the clock tower at Aberdeen's Town House could end up at more than £4.3m, it has been revealed.
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A volunteer RNLI crew have been given the seal of approval from an unlikely passenger.
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The A1 road in East Lothian has been closed in both directions following a collision.