In a small bowl, dissolve yeast in water. Let stand for 5 minutes.
In a large bowl combine butter or margarine, sugar, salt, and egg. Add yeast mixture and 1/2 of the flour and mix until smooth. Stir in the remaining flour and the seeds. Mix in additional water as needed to make a stiff dough.
Turn dough out onto a lightly floured surface. Knead well. Place dough in a lightly oiled bowl, and turn once to coat surface. Cover with a damp cloth and place in a warm spot to rise for about 1 1/2 hours.
Roll dough into short ropes about 1/2 inch thick. Join ends to form donut shape. Set aside to rise for a few minutes.
Preheat oven to 350 degrees F (175 degrees C).
Fill a large saucepan half full of water; bring to a boil. Drop taralli into water and boil for 1 minute. Remove from water, letting both sides dry on a sheet of waxed paper.
Bake at 350 degrees F (175 degrees C) on a lightly greased cookie sheet, turning a few times during baking until medium brown and crisp.
