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Mix the water and active dry yeast together, let sit for 10 minutes.
On a stand mixer using a whip attachment, mix the sugar, salt, milk powder, unsalted butter and vanilla extract until light and foamy on high speed. Add the eggs, one at a time, on medium speed. Add the yeast mixture to it.
Change the whip to hook attachment and add the cake flour, bread flour and baking powder. Beat on low speed and then on high speed, until the dough separates from the side of the bowl. Let the dough rise for one hour.
Transfer the dough onto a lightly floured surface, roll it out to about 1/4-inch thickness and cut into 1-inch to 2-inch squares. Heat 3 inches of oil in a frying pan on medium-low heat. When the oil is fully heated, drop the dough and fry them in batches. Keep turning the beignets and deep fry until golden brown. Transfer the beignets out with a strainer and drain on paper towels. Sprinkle the powdered sugar generously and serve warm.