In a large pan of salted water, boil potatoes until just cooked. Drain, rinsed under cold water, and leave to cool.
Fry bacon until crisp, remove from pan and set aside.
Add onion to bacon drippings and cook gently until softened. Add honey and vinegar to pan and bring to a boil. Blend cornflour and water and add to the honey mixture. Cook mixture until thickened and bubbly. Remove from heat.
Crumble bacon into the pan, and add the fresh or dried dill. Cut the cooled potatoes in half (leave skins on).
In large bowl, combine potatoes and watercress. Pour dressing over the salad and toss gently. Serve immediately.