In a large bowl, whisk together the flour, sugar, baking powder, and salt. In a separate bowl, mix the milk, eggs, vanilla extract, and water. Gradually add the wet ingredients to the dry ingredients, stirring until a smooth batter forms.
In a deep frying pan, heat the vegetable oil to 375°F (190°C). To test if the oil is ready, drop a small amount of batter into the oil—it should sizzle and rise to the surface.
Pour the batter into a squeeze bottle or use a funnel to drizzle it into the hot oil in a circular, lacy pattern. Fry for about 1-2 minutes on each side until golden brown. Use tongs to remove and drain on paper towels.
Generously sprinkle the warm funnel cakes with powdered sugar and serve immediately. Enjoy with toppings like chocolate syrup, whipped cream, or fresh berries.