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.

Combine 2 cups sugar and 1 cup water in a medium saucepan. Bring to a boil, and cook until the mixture reaches the thread stage, 230 degrees F (108 degrees C), on a candy thermometer, or until a small amount dropped in cold water forms a soft thread. Stir in the peels; reduce heat, and simmer until syrup thickens slightly, about 5 minutes, stirring frequently. Drain.

Roll peel pieces, a few at a time, in remaining sugar. Let dry on wire rack for several hours, or until no longer sticky.