In a small saucepan, saute onion and 1/8 teaspoon paprika in 1 teaspoon oil till tender. Stir in the water, tomato paste, bay leaf, bouillon and Italian seasoning. Bring to a boil. Reduce heat; simmer, uncovered for 10 minutes.
Meanwhile in a large resealable bag, combine flour, parmesan cheese, salt, garlic powder, oregano and remaining paprika. Add chicken; seal bag and toss to coat.
In a large non-stick skillet, coated with cooking spray, cook half the chicken in 1 tsp. oil for 2-3 minutes on each side or till no longer pink. I served over spaghetti noodles