Preheat your oven to 325°F (160°C).
In a saucepan, heat the milk until warm but not boiling.
In a mixing bowl, whisk together the eggs, sugar, and vanilla extract.
Slowly add the warm milk to the egg mixture, whisking constantly.
For the caramel, heat the sugar and water in a saucepan over medium heat until it turns golden brown.
Pour the caramel into the bottom of each ramekin.
Pour the custard mixture over the caramel in the ramekins.
Place the ramekins in a baking dish and fill the dish with hot water halfway up the sides of the ramekins.
Bake for 45 minutes or until the custard is set.
Let cool, then refrigerate for at least 2 hours before serving.