In a small bowl, sprinkle the gelatin over the water and let it bloom for about 5 minutes.
In a saucepan, combine the heavy cream, whole milk, and sugar. Heat over medium heat until the sugar is dissolved and the mixture is hot, but not boiling.
Remove the saucepan from the heat and stir in the bloomed gelatin until fully dissolved. Add the vanilla extract and mix well.
Pour the mixture into ramekins and let them cool to room temperature. Then, refrigerate for at least 4 hours, or until set.
To serve, you can unmold the panna cotta onto plates or serve directly in the ramekins. Enjoy!