Combine water, sugar, jelly, lemon juice and peel in fry pan. Cover, and simmer 5 minutes until jelly is dissolved.
Peel and cut peaches in halves. Place cut side down in syrup in fry pan. Cover and simmer 10 minutes. Turn cut side up; cover, and cook 5 minutes more.
Remove peaches from syrup into a dish. Cook syrup, stirring constantly, until it begins