In 2-quart saucepan, combine water and gelatin; let stand 5 minutes. Stir in sugar; bring to a full rolling boil. Reduce heat to medium; simmer 10 minutes without stirring. Temperature should read 220°F. on candy thermometer. Remove from heat. Add powdered sugar; beat with electric mixer at low speed until foamy. Add baking powder and vanilla; beat on low speed for 5 minutes or until glossy and of spreading consistency.