S.,
Dump that bottle! Falling asleep with a bottle in his mouth can cause bottle caries, which is a rotting of the back teeth. Even milk has sugars in it that sit all night long on his teeth, inviting bacteria to feast away. A sippy cup or straw cup is not a better solution, because it still leaves him falling asleep with a drink in his mouth.
I know you can't throw them out. I know it's going to be hard to say there are no more bottles when you have a new baby in the house, and he sees her with one. Does he have a lovey? Another comfort object might help him feel secure going to sleep without his bottle. My mom told my little brother when he turned two that he had to leave all of his bottles under the Christmas tree for Santa to give to the little babies who need them, and that he would be left toys in return. He did it, opened his new toys then next morning, and whenever he asked for one, my Mom would remind him that he "traded" them to Santa for all of his new big-boy toys.