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Preheat oven to 375 degrees
Thoroughly cream margarine, sugar and vanilla. Add egg and water.
Beat until light and fluffy.
Combine flour, baking powder and salt. Blend into creamed mixture.
Divide dough in half and chill 1 hour. On a lightly floured surface roll dough to 1/8-in thickness.Cut into desired shapes.
If desired, brush lightly with milk and sprinkle with colored sugar, or, after baking, frost with your favorite cookie frosting.
Bake on greased cookie sheet 8-10 minutes. Do not overbake. Cool slightly. Transfer from pan to paper towel or rack.