In a small bowl, combine the warm water, sugar, and yeast. Stir gently and let it sit for about 5-10 minutes until frothy.

In a large mixing bowl, combine the flour and salt. Make a well in the center and add the yeast mixture, milk, egg, and vanilla extract.

Mix until a soft dough forms. If the dough is too sticky, add a little more flour, one tablespoon at a time.

Knead the dough on a floured surface for about 5-7 minutes until smooth and elastic.

Place the dough in a greased bowl, cover it with a damp cloth, and let it rise in a warm place for about 1 hour, or until it has doubled in size.

After the dough has risen, punch it down and turn it out onto a floured surface. Roll it out to about 1/2 inch thick.

Cut the dough into circles using a round cutter or a glass.

Heat oil in a deep pan or fryer to 350°F (175°C). Carefully drop the fritters into the hot oil, a few at a time, and fry until golden brown on both sides, about 2-3 minutes per side.

Use a slotted spoon to remove the fritters from the oil and drain them on paper towels.

If desired, dust the fritters with powdered sugar before serving.