In a large liquid measuring cup or batter bowl with a spout, whisk together the milk, egg, water, and vanilla.

Add sugar, baking powder, and salt to the milk mixture and whisk until well combined.

Gradually add the flour to the mixture, whisking until the batter is completely smooth. Set aside.

In a medium, deep-sided pan or pot, heat 1 inch of oil to 375°F over medium-high heat. You can test if the oil is ready by putting the end of a wooden spoon in the pot; if bubbles form around the spoon, it's ready. Reduce the heat to medium once it reaches the correct temperature.

Drizzle the batter from the measuring cup in a thin line, swirling around the pan and overlapping as desired to form the classic funnel cake shape. Cook for about 2 minutes or until the bottom is light golden brown, then carefully flip using tongs or a spatula and cook for another 2 minutes or until golden brown on both sides.

Once cooked, remove the funnel cake from the oil and place it on a plate lined with paper towels to drain any excess oil.

Dust the funnel cake with 2 tablespoons of powdered sugar while it's still warm.

Repeat the cooking process with the remaining batter to make more funnel cakes.

Serve the homemade funnel cakes warm and enjoy the crispy, sweet treat!