Preheat oven to 325 degrees F and line an 8x8-inch pan with parchment paper and set aside.
In a large bowl or stand mixer fitted with a whisk attachment, whip the egg whites on medium-high speed until stiff peaks form and transfer to a separate bowl.
Add the egg yolks, sugar, and water to the mixing bowl and beat on medium-high speed for about 5 minutes until foamy and pale yellow.
Add the melted butter and vanilla and beat for another minute, scraping down the sides as needed. Add the flour and beat until fully incorporated.
Add in the lemon juice and zest and beat until thoroughly mixed. Slowly add in the milk while mixing until fully incorporated.
Gently stir in the egg whites 1/3 at a time but not mixing them completely. You want lumps of eggs whites in the batter so the cake bakes properly.
Pour batter into the prepared baking pan and bake for 50 to 70 minutes, the top of the cake should be golden brown and firm to the touch.
Remove from the oven and let the cake cool completely to room temperature and then store loosely covered in the fridge for 4 to 12 hours before best results.
Dust the top of the cake with powdered sugar. Slice cake into 9 slices and top with the lemon cream recipe below or just plain whipped cream and candied lemons.