Pour the milk into a pan, and heat over low to medium heat until just boiling.
Remove the milk from the heat source and stir in the vinegar.
Once the milk has curdled, add some ice or cold water to help cool off the mixture. This prevents the cheese from cooking further and also helps water down and remove some of the acid from the final cheese.
Line a medium sized bowl with cheesecloth or a clean, fine woven cotton cloth. Pour the curdled milk mixture into the lined bowl.
Raise up all of the sides of the cloth and pull it up over the bowl, allowing the whey to strain out from the curds inside the cloth.
Wring the cloth to press out as much of the liquid whey as possible. Then smooth out the cloth over the top of the cheese and press it flat. You can use two wooden cutting boards or similar smooth surfaces.
Press out as much liquid as possible, and then unwrap and check on the cheese. If it holds its shape well, you can remove the cheese from the cloth and use it immediately.If not, you can place a heavy object over the cloth-wrapped cheese to help further press it into shape and remove the remaining excess liquid.
Homemade paneer can be served raw or can be cooked. It can be pan-fried in oil, grilled, or boiled in water. (Adding some salt to the water helps add flavor.)To store the paneer for future use, cover it in water or the strained out whey, and place, covered, in the refrigerator. If using water, change out the water every other day to help keep it fresh longer.You can drink the leftover whey, or use it in soups or smoothies.While you can make paneer with skim milk, lower fat milks make less quantity of the cheese and the resulting cheese has a more rubbery texture. For best results, use whole milk. Lemon juice can be used in place of the vinegar.Nutritional information includes the resulting whey.