Spelled with a lowercase 'm', milquetoast is an American English variant of milktoast and is similarly used to refer to a weak and timid person, particularly an emasculated man.
This word is involved in an interesting circuit of semantics and American popular culture. Let's begin in the middle. Harold Tucker Webster, a cartoonist, chose this spelling of milktoast as the surname for one of his most popular characters, Caspar Milquetoast. Milquetoast was described by his creator as 'a man who speaks softly and gets hit with a big stick." His hat blows off onto a lawn, but seeing the "Keep Off the Grass" sign, he sighs and goes off to buy a new hat. You get the picture.
The Milquetoast cartoons were very popular and had wide circulation in the 30 years they were published, from 1924 to about 1954. The public began to use Milquetoast to mean the sort of timid, unassertive, weak, push-over, door-mat, wussy person that Caspar represented. By the middle of the 1930s, the proper noun had become a common noun spelled with a lowercase letter 'm', and so had formally entered the lexicon of American English.
It is a clear result of the influence of mass media and popular culture that we use milquetoast for this meaning rather than the earlier milk toast. Milk toast is toast soaked in milk, often for easy consumption by persons who are very weak from illness. Milk toast itself is a variant of the very old term milksop, bread used to soak up milk, a somewhat disparaging term that has been in use for centuries to mean a meek, submissive person. Being a single word and having the feminine-looking '-ilque' spelling may have contributed to its adoption.
American Heritage Dictionary