Step 1 - Beat butter in the bowl of an electric mixer until as white as possible on a low speed of about 3 out of 10 where 10 is the fastest. About 5 minutes.
Step 2 - Beat in sugar, water and vanilla in two batches. Beat and scrape for about 10 minutes until the buttercream no longer feels grainy (test it between your fingers). Set aside until ready to use. This buttercream does not crust.
Tip: when colouring press the buttercream down with the spoon to mix so that you don't aerate or whip it.