combine the water, milk and egg in a large mixing bowl and mix well. add the flour, baking powder, salt , sugar and vanilla and mix until the batter is smooth. pour oil into a large, deep pot or deep fryer and heat to 360°F. drop the batter by spoonfuls into the hot oil and fry, turning two or three times, until they are golden brown. drain on paper towel and sprinkle with powdered sugar.