Mix together breadcrumbs, parmesan cheese, baking powder and salt; stir in eggs, milk and parsley. With oiled hands, shape into 20 balls; place on tray. Refrigerate for 30 minutes.
TOMATO SAUCE: In large saucepan, heat oil over medium heat; fry onion and garlic until onion is softened, about 3 minutes. Add 1 1/2 cups water, tomatoes, tomato paste, wine, and salt; simmer until thickened, about 25 minutes.
Meanwhile, in large skillet, heat oil over medium-high heat; fry balls, turning often, until golden all over, about 4 minutes. Using slotted spoon, transfer to sauce. Cover and simmer until firm inside, about 20 minutes. Stir in basil.