Ok, this may be a goofy answer, but I think I never have this problem because I make sure to use the largest bowl in my kitchen. The dough rises but never reaches the cloth.

I like the Alton Brown method for dough. I let it rise in a clear cylindrical container. I wrap a large rubber band around it marking where the dough was to start with. This way Its super easy to tell when it has doubled in size. As long as your container is more than double tall, you won't ever have to worry about the towel touching the dough. However, if it absolutely has to touch the towel your using, I would go with what the editor has said. The type of towel is very important. You can pick up a fairly inexpensive bit of linen or canvas at your local fabric store. Just stay away from anything dyed as the color may transfer to the dough since the fabric is new and would take many many washes to get rid of the excess dye.

I cover my dough loosely with an oiled piece of plastic wrap. It never sticks...

Lightly oiled clingfilm works for me.

Maybe its the type of bread i make, but i always punch it down from the huge bowl it rises in, and then weave it on a baking tray, cover it with egg wash (and black and white sesame seeds) and let it rise again for another half hour. It never gets a chance to touch the cloth, and makes fluffy beautiful bread.

I use a disposable shower cap (acquired during hotel stays) on the top of my bowl when bread is rising. They are more flexible than cling film and rise with the bread and they don't need oiled as they never touch the dough.

I use a (clean) shower cap on the first rise, and for doughs that go into a loaf pan. The elastic holds it nicely around the container, and you can poof up the top so the rising dough won't touch the plastic. Just be careful when you take it off that it doesn't snap and hit the dough. For loaves that are freeform (round, baguettes, etc), I upturn a mixing bowl, roasting pan, etc over the dough for the second rise. I find that covering it with something that never touches the dough gives me the best results.

A clean plastic grocery bag placed upside down over the bowl works well too. (Same basic idea as flmorrison's shower cap.) Secure it with a rubber band around the bowl, leaving plenty of room at the top for the dough to rise without touching the plastic.

Patient : Doctor, doctor, it hurts when I do this ...
Doctor : So don't do that!

As I show in this video, I rise my bread in the oven, uncovered. Works great, does not dry out in the least. Though my wife says if you ever do have problems with it drying out, just put a pan of water underneath it.

I preheat the oven to 170F then turn it off and let the bread rise in there in the pans.

I also use the oiled plastic wrap method and it works for me well.

Personallly, I have always found that using a towel at all is cumbersome and messy. I put a little flour right onto my countertop and turn the dough out onto the counter. While needing, I usually have to add a little more flour than expected to keep it from being too sticky.

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You mean after you have shaped the loaf and it is proofing before being put in the oven I assume. I liked the idea here so much I did it myself with an old comforter container.

http://www.thefreshloaf.com/node/8947/quick-proofing-box-available-materials

You can put a little cup of hot water in there to keep the temp up a bit on cold days and keep it moist in there. Works quite well. I went a further step and cut a hole in the flap so I can proof loaves right on my peel.

Put the bread in a straight-sided container that has been well greased and place in your (off) oven, uncovered, along with a large baking pan that is full of steaming hot water. The warmth of the oven will help the rise and the steam will keep the dough moist.

When covering a dough with a "wetter is better" policy (baguettes, ciabatta, etc.), I just make sure to sprinkle the top of the loaves and with water and make sure my (yep, tightly woven) cloth is damp too. No sticking problems yet!

I just experimented with an upside-down mixing bowl. Works for free-form loaves, i think!

plastic wrap sprayed with cooking spray or A generous flouring depending on the style of bread. Emma's suggestion of working the flour into a towel is good as well.
Keep in mind that as the bread rises, the flour particles get spread further apart (in addition to getting wet down by the dough). If this looks like it's going to be a problem sometimes I shake on more flour part way through the rise.

If the dough is in a round bowl, use a glass saucepan lid and spray the underside of the lid with cooking spray or apply a thin coating of oil. Spray the tea towel with cooking spray. It's easier to coat the towel, lid or piece of plastic, than to apply something to the dough before it expands. Wax paper will work too.

Lightly oiled plastic wrap. Works every time.

I use plastic wrap or a very damp tea towel.

If you're concerned about being green, you can even fold up the plastic wrap when you're done, pop it in the freezer, and reuse it...

So many great suggestions! Thanks, all!
- Lauren

You may also want to check that you've put enough flour in the bread (I don't measure, I just know when it's done from repetition). White bread dough, for instance, is supposed to be not quite slightly sticky; I've noticed that I've had the same problem you have when I've skimped on flour and the loaves don't rise as high.

When I'm doing French bread - another "wetter is better" bread - I use plastic wrap under the towel.

I might try letting my bread rise in the oven, although I'm often using the oven on other projects while the bread rises - which creates a wam environment for the bread to rise.