Cream butter; gradually add 1/4 cup sugar, beating until light and fluffy. Add water and vanilla; beat well. Gradually stir in flour. Fold in pecans. Chill at least 1 hour.
Break off dough by heaping teaspoons, and shape into 2- inch crescents. Place on ungreased cookie sheets. Bake at 300° for 20 minutes. Remove immediately from cookie sheets, and coat with additional powdered sugar. Cool on wire racks.