In a large mixing bowl dissolve yeast in water. Add milk, egg, vanilla, oil, sugar and salt. Add flour, beating vigorously. Dough will be very sticky. Heat oil to 370 degrees or until 2 matches floating in oil ignite.
Drop beignets a few at a time into oil.
As they puff up, turn over to brown the other side. Remove and drain on paper towels or paper plates, dust with powdered sugar. Unused dough can be refrigerated up to one week.