Dice the potatoes, bacon, and onion.

In a large pan, brown the diced bacon and onion.

Add the diced potatoes to the pan.

Cover the pan and simmer for 15 minutes, or until potatoes are tender.

In a separate bowl, mix together the vinegar, sugar, and water.

Pour half of the vinegar mixture over the potatoes in the pan.

Simmer until the liquid reduces slightly, stirring frequently.

Pour the remaining vinegar mixture over the potatoes.

Simmer again until the liquid reduces, stirring frequently.

Serve warm.