Scrub potatoes; cook in boiling water for 30 minutes or until tender. Drain, and cool slightly. Peel potatoes, and cut into 3/4-inch cubes; set aside.
Cook bacon in a large skillet until crisp; remove bacon, reserving drippings in skillet. Crumble bacon, and set aside.
Sauté onion in pan drippings until tender. Stir in salt, pepper, and vinegar; bring mixture to a boil. Remove mixture from heat; add reserved bacon, mixing well. Pour mixture over potatoes; mix well, and serve hot.