Place milk in top of a boiler; bring water to a boil. Cook until milk is thoroughly heated. Set aside.
Beat eggs at medium speed with a electric mixer until frothy. Add sugar and flour, heating until thick. Gradually stir about 1 cup hot milk into yolk mixture; add to remaining milk, stirring constantly. Cook custard mixture in double boiler over low heat, stirring occasionally, 30 minutes or until thickened. Stir in vanilla. Serve warm or cold.
Baked custard: Pour custard mixture into 6 (6ounce) custard cups in a 13x9x2 inch baking pan, pour hot water to a depth of 1 inch into pan.
Bake at 350°F for 35 to 40 minutes or until knife inserted in center comes out clean. remove cups from water. Serve warm or cold.