In the steel bowl of your stand mixer fitted with paddle attachment or using your hand mixer mix together confectioners sugar and meringue powder.
In a bowl mix together warm water and vanilla extract.
With mixer running running on low speed, start adding the water-vanilla extract mix (1 tablespoon at a time) into the dry ingredients. It will start appearing all clumpy. Don't worry you are doing it right.
Increase the speed to medium and keep adding more water. It will start getting little loose.
Now beat at medium-high speed for 3-4 minutes till the icing looks shiny and forms peaks [see picture].
Store icing in an airtight container at room temperature or in the refrigerator.