Cream butter and cream cheese until light and fluffy. Gradually add 1 c. confectioners sugar, beating thoroughly. Stir in lemon juice, vanilla and lemon peel. Add flour and mix well. Stir in nuts.
Drop by scant teaspoonfuls about 2" apart onto ungreased baking sheet. Bake in slow oven (300°) about 25 minutes, until set but not brown. While hot roll in sifted conf