Place chicken in a large flat dish. Pour buttermilk over; refrigerate 1 hour.

Combine flour, salt and pepper in a double-strength paper bag. Drain chicken; toss pieces, one at a time, in flour mixture. Shake off excess; place on waxed paper for 15 minutes.

Heat 1/8 to 1/4 inch of oil in a skillet; fry chicken until browned on all sides.

Cover and simmer, turning occasionally, for 40-45 minutes, or until juices run clear.

Uncover and cook 5 minutes longer.

Remove chicken and keep warm.

Drain all but 1/4 cup drippings; stir in flour and bubbly.

Add milk and 1-1/2 cups water; cook and stir until thickened and bubbly. Cook 1 minute more.

Add remaining water if needed. Season with salt and pepper.

Serve with chicken.

YIELD: 4-6 servings.