1. Remove the rind of the lemon with a peeler (just the yellow part) and slice it thinly. Cut off the white part and remove the pulp and juice.
2. Put the sliced rind, pulp and juice in a small heavy sauce and cook until thick and the juiced reduced. Set it aside.
3. To make the panna cotta- place the water in a small bowl and sprinkle over the gelatin. Set it aside until the gelatin absorbs the water (to bloom).
4. Place the milk in a saucepan over medium heat with the sugar, stir occasionally and allow the milk to come to a slow boil. Add in the gelatin and cook, stirring for a minute or until the gelatin dissolved.
5. Remove from heat and add in the vanilla. Pour mixture into 4 little ramekins and let it cool at room temperature before refrigerating. Refrigerate for 4 hours or until set.
6. Top it with lemon compote before serving.
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