Preheat the oven to 350F. In a microwave or small saucepan, heat the water, milk, and butter until the butter melts.
In a large mixing bowl, sift the flour and add the sugar, salt, and yeast. Pour the wet ingredients and vanilla extract into the bowl with the dry ingredients and mix.
Add the egg and continue to mix until a dough forms.
Knead the dough on a floured surface for 3 minutes. Place the dough in a bowl and cover with plastic wrap. Let the dough rest for 40 minutes so it can rise. To make the filling, place sugar, ground cinnamon and softened butter in bowl and mix.
After the dough has finished rising, roll it out to a rectangle shape (mine was 15x9 inches). Spread the butter and sugar mixture on top of the dough using a spatula. Roll up the dough tightly to make a log. Cut the log into 10 equal pieces.
Shape each piece into a bunny head. Open and bend the dough and repeat one more time and it will get the ear shape.
Place the cinnamon rolls onto a silpat covered baking sheet and allow them to rest for 10 minutes to rise before baking. For the icing, sift the powdered sugar, add vanilla extract and milk, and mix.
Divide to 4 cups and color with gel food colorings until you get your desired colors.
Bake for 20 minutes or until the tops have turned a golden brown.
Remove the warm rolls from the oven and place them on a parchment paper covered cooling rack. Spread the icing and sprinkles on top of the cinnamon rolls and serve.