This recipe has been featured in a post on The Recipe Girl blog: Martha Stewart’s Sugar Cookies.

Martha Stewart's Royal Icing
Yield: About 2 1/2 cups
Prep Time: 12 min
Perfect. This icing dries hard, making stacking easier.
Ingredients:
1 pound powdered sugar
5 Tablespoons meringue powder
1/2 cup water
liquid or gel-paste food coloring (optional)Directions:
1. In the bowl of an electric mixer fitted with the paddle attachment, combine sugar, meringue powder, and a scant 1/2 cup water on low speed. Beat until mixture is fluffy yet dense, 7 to 8 minutes.
2. To thin the icing for flooding (filling in areas with a thin layer of icing), stir in additional water, 1 teaspoon at a time. Test the consistency by lifting a spoonful of icing and letting it drip back into the bowl; a ribbon should remain on the surface for 5 to 7 seconds.
3. To tint icing, dip a toothpick or wooden skewer into food coloring, and gradually mix it in until the desired shade is reached.
Tips:
*My favorite sugar cookie recipe to use for this icing is No Fail Sugar Cookies.
Source: RecipeGirl.com (via Martha Stewart's Baking Handbook)