In a large bowl, whisk together flour, sugar, baking powder, and salt.
Add milk, eggs, and vanilla extract. Mix until smooth.
Gradually add water until the batter reaches a thin, pourable consistency (similar to pancake batter).
Pour about 1 inch of vegetable oil into a deep frying pan or Dutch oven.
Heat over medium-high heat until it reaches 375°F (190°C).
Pour about ½ cup of batter into a funnel (or squeeze bottle) while covering the bottom with your finger.
Hold the funnel over the hot oil and release the batter in a swirling motion to create a lacy pattern.
Fry for 1-2 minutes per side, until golden brown.
Use a slotted spoon to flip and remove the funnel cake. Drain on paper towels.
Dust generously with powdered sugar while still warm.
Dust generously with powdered sugar while still warm.
Optional toppings: chocolate syrup, whipped cream, fresh berries, or cinnamon sugar.