Step 1

Preheat oven to 350°F. Beat butter, cream cheese, granulated sugar and vanilla in large bowl with electric mixer on medium speed until light and fluffy. Gradually add flour, beating until well blended after each addition.

Step 2

Shape dough into 1-inch balls. Place, 2 inches apart, on ungreased baking sheets.

Step 3

Bake 15 min. or until bottoms of cookies are lightly browned. Remove to wire racks; cool completely. Sprinkle with powdered sugar just before serving. Store in tightly covered container at room temperature.