Heat the milk in a large pot, over a low fire, until it boils. Remove immediately from the fire and cool until you can put a finger in the milk and count to ten.
Place 4 spoons of the milk in a bowl, add the yoghurt, stir, and add to the pot of milk.
Transfer to a clay or glass bowl, cover well, and wrap in a thick, heavy blanket. Leave for 6-8 hours in a warm place.
Keep the prepared yoghurt refrigerated.
To prepare the labaneh: Place the cloth in a large strainer. Mix the yoghurt with the salt and pour over the cloth.
Tie and hang above the sink, or above a bowl. The labaneh will be ready in 10-12 hours.
Transfer the labaneh to a container, press, and cover with olive oil.
It's worth making the effort to get sheep's milk for preparing the labaneh and the leben.
Source: The Jerusalem Mosaic. Copyright 1995 Hebrew University of Jerusalem -- All Rights Reserved.