Preheat oven to 325°F. Sift flour, sugar, baking powder and salt into large bowl. Using electric mixer at low speed, beat in vegetable oil, egg yolks, lemon juice, water and lemon peel. Combine egg whites and cream of tartar in another large bowl. Using clean dry beaters, beat until stiff but not dry. Fold 1/4 of whites into batter to lighten. Gently fold in remaining whites.
Pour cake batter into ungreased 10-inch-diameter tube pan. Tap pan on counter or run rubber spatula through cake batter to release air pockets. Bake cake until springy to touch, about 1 1/4 hours. Immediately invert cake in pan over neck of bottle. Cool cake completely. Run knife around pan sides to loosen cake. Transfer cake to plate. Dust with powdered sugar.