1. Beat butter, granulated sugar, eggs and lemon peel in large bowl until well blended. Stir together flour, baking powder and salt; gradually add to lemon mixture, beating until blended. Stir in coconut. Cover; refrigerate dough about 1 hour or until firm enough to handle.
2. Heat oven to 300°F. Line cookie sheet with parchment paper or lightly grease. Shape into 1-inch balls; roll in powdered sugar. Place 2 inches apart on prepared cookie sheets.
3. Bake 15 to 18 minutes or until edges are set. Slide parchment paper and cookies to wire rack or remove cookies from greased cookie sheet to wire rack. Cool completely. Store in tightly covered container in cool, dry place. Makes about 48 cookies.