1. Heat oven to 300°F.
2. Beat butter, 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. Shape into 1-inch balls; roll in powdered sugar. Place 2 inches apart on ungreased cookie sheet.
3. Bake 15 to 18 minutes or until edges are set. Immediately remove from cookie sheet to wire rack. Cool completely. Makes about 48 cookies.