Place a strainer over a large bowl and line it with a muslin cloth (cheesecloth).
Add milk to a heavy-bottomed 3-quart saucepan and bring to a full boil over medium heat, it will take about 10 to 12 minutes.
Turn off the heat and let the milk cool for 3 to 4 minutes. This step is important. If the milk is too hot, the chenna will turn rubbery.
Mix the vinegar and water together in a small bowl. Add it to the milk one tablespoon at a time, stirring gently between each addition. Do not stir vigorously. Gentle, slow stirring is key.
After the 3rd or 4th tablespoon, you'll see the milk separate into white curds and a pale greenish-yellow liquid (whey). Once this happens, stop adding vinegar. You don't need more.
Pour the contents of the pan over the muslin cloth in your strainer. The whey will drain through. Save the whey if you like, it's great added to dough or soups.
Pour the ice-cold water over the chenna to rinse away the vinegar and remove any sourness.
Gently squeeze the cloth just until the water stops dripping. You're removing excess water, not drying out the chenna completely.
Place the cloth back on the strainer. Set something heavy on top (about 3 pounds) and leave it for 8 to 10 minutes. You're not trying to dry it out, just removing some of the excess moisture. When you unwrap it, the chenna should look slightly crumbly and feel a little dry to the touch. If it looks pasty or feels sticky, it still has too much water. Give it a few more minutes under the weight.