In large skillet, fry bacon until crisp. Remove bacon and set aside.
Drain off all but 2-3 tablespoons of drippings.
Cook onion in remaining drippings until tender.
Stir in flour and blend well.
Add vinegar and water, and cook and stir until bubbly and slightly thickened.
Add sugar and stir until it dissolves.
Crumble bacon and stir in the bacon and potatoes.
Heat through, stirring lightly to coat potato slices.
Serve warm.