After a couple of botched experiements I came to realise that not all white glue is equal and not all liquid starch is suitable either. The ones I found to work were Elmer's Glue-All multi-purpose glue (Not Elmer's school glue) and a concentrated liquid starch called Sta-Flo, when the first brand I tried (Niagara) didn't react at all.
Mixing the glue with the food colouring first is a good idea to get the colouring even, because when you add the liquid starch it makes a big crazy congeled blob and you have to wait five minutes or so for the glue to absorb most of the liquid starch before kneading the resulting putty. Honestly, when you first mix them you'll be thinking, "oh gosh no, that's got to be wrong. Ew", but it does come together into a great silly putty and I have posted a lot of pictures to prove this to you, in case you feel like you may lose hope and bin the gluppy mess before it reaches it's glorious silly puttiness.
So there you can see the progression from pouring the liquid starch into the glue, to after stirring and leaving for 5 minutes, to pulling out of the mixing bowl onto paper towel and finally after about 5 to 10 minutes of kneading in your hands.
The last pic I have for you is of some pink silly putty we made that shows you can copy newspaper print onto it, just like you could with the original store bought silly putty and also, like that, it bounces when you roll it up into a ball.
It's one of those things that would be great for older children to make themselves, but I had to make and knead the stuff for my kids because they are only two and three years old. Probably not a good idea for children younger than mine though as I doubt it's snack worthy.