Toasted Coconut Truffles

4 cups (24 ounces) semisweet chocolate chips
8 ounces cream cheese, softened and cubed
3/4 cup sweetened condensed milk
3 teaspoons vanilla extract
2 teaspoons water
1 pound white candy coating
2 tablespoons flaked coconut, finely chopped and toasted

In a microwave or heavy saucepan, melt chocolate chips. Add the cream cheese, milk, vanilla extract and water; beat with a hand mixer until blended. Cover and refrigerate until easy to handle, about 1 1/2 hours.

Shape into 1-inch balls and place on wax paper-lined baking sheets. Loosely cover and refrigerate for 1 to 2 hours or until firm.

In a microwave or heavy saucepan, melt candy coating, stirring often. Dip balls in coating; place on wax paper-lined baking sheets. Sprinkle with coconut. Refrigerate until firm, about 15 minutes. Store in the refrigerator in an airtight container.

Yields about 5 1/2 dozen.