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James's Bacon Warm Potato Salad

3 potatoes -- peeled
3 slices bacon
1/4 cup onion -- chopped
1 tablespoon flour
2 teaspoons sugar
3/4 teaspoon salt
1/4 teaspoon celery seed
1/4 teaspoon pepper
3/8 cup water
2 1/2 tablespoons vinegar
Boil potatoes in salted water until tender. Drain and let cool. When cool; coarsely chop. Cook bacon in large saucepan until crisp. Remove from pan; crumble when cool. Saute onion in grease until softened. Combine flour, sugar, salt, celery seed, and pepper. Stir into onions until smooth. Stir in water and vinegar. Bring to a boil, stirring constantly. Stir in potatoes and bacon; serve hot