In a medium bowl, cream the butter and sugar. Stir in vanilla and water. Add the flour and nuts, mix until blended. Cover and chill for 3 hours.

Preheat oven to 325 degrees.

Shape dough into balls. A #50 disher makes 36 cookies about 1-1/2 to 2 wide. Place on an unprepared cookie sheet and bake for 15 to 20 minutes in the preheated oven. Cookies are done when bottoms start showing light brown. Remove from pan to cool on wire racks. When cookies are cool, roll in confectioners sugar. Store at room temperature in an airtight container.