Bake hazelnuts in a shallow pan at 350°, stirring occasionally, 5 to 10 minutes or until toasted. Transfer hazelnuts to clean kitchen towel; rub with towel to remove skins. Cool.
Process hazelnuts and flour in a blender or food processor until finely chopped.
Beat butter, sugar, and vanilla at low speed with an electric mixer until blended. Beat at high speed 5 minutes or until fluffy. Gradually add hazelnut mixture, beating just until combined. Cover and chill 10 minutes.
Shape dough, 1 tablespoon at a time, into 2-inch-long logs using floured hands, and place 1 inch apart on ungreased baking sheets.
Bake at 350° for 15 to 18 minutes or until lightly browned. Cool on baking sheets 3 minutes; roll warm logs in powdered sugar. Cool on wire racks, and roll again in powdered sugar.
