Step 1: Combine the sugar and water in a wide pan and stir over a medium heat until sugar has dissolved, then increase the heat and boil rapidly until the mixture turns deep golden brown. Do not stir at this time or the mixture will crystallise. Pour the caramel into 4 or 5 individual heatproof dished (small soufflé or small ramekins are excellent); rotate the dishes so that the caramel covers the sides and base of the dish.
Step 2: Beat the eggs, vanilla and sugar together lightly. Combine the milk and cream in a saucepan, bring to scalding point and cool slightly. Pour milk mix gradually over the egg mixture stirring constantly. Strain into a large jug to remove any specks of eggs, and ensure the mix is of a velvety texture.
Step 3: Pour the custard carefully over the caramel in dishes. Put dishes into a baking dish with hot water coming half way up the sides of the dishes.
Step 4: Bake in a moderately slow oven for 25-30 minutes or until set. Remove from oven and water, cool and then refrigerate.
Step 5: When cold turn out carefully on to deep serving plates to serve.
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