Bring water to boil in 2-quart pot. Add sugar, stir until it dissolves. Then add instant coffee and stir. Remove from heat and allow to cool for about 30 minutes.
Pour contents into a large mason jar. Add vodka and vanilla extract. Seal and shake gently. Store in a cool dark place for two weeks shaking periodically. Keeps indefinitely. Great in tea, coffee and Kahlua brownies.