Place lemon and orange peel in large saucepan and cover with water. Bring to a boil over high heat. Boil for 20 minutes, drain and set aside.
In medium saucepan, combine 2 cups sugar and 1 cup water. Bring to a boil and cook until mixture reaches thread stage, 230 degrees F (108 degrees C) on candy thermometer, or small amount dropped in cold water forms a soft thread. Stir in peel, reduce heat and simmer 5 minutes, stirring frequently. Drain.
Roll peel pieces, a few at a time, in remaining sugar. Let dry on wire rack several hours. Store in airtight container.
