Preheat the oven to 350°F (175°C) and line a baking sheet with parchment paper.

In a saucepan, combine sugar, butter, and water over medium heat.

Stir until the mixture reaches a boil, then add vanilla extract.

Add walnuts to the toffee mixture, stirring to coat evenly.

Spread the coated walnuts onto the prepared baking sheet.

Bake for 15 minutes, stirring halfway through.

Remove from oven and let cool before serving.