Heat milk in a heavy bottom pot over medium-high heat until boiling. Remove from heat and add vinegar. Stir a couple times until curds separate from whey, about 5 minutes.
Line a colander with cheese cloth. Pour curds and whey through colander and drain. Wrap curds with cheesecloth and place a heavy pot fill with water over curds to press and drain completely, about 2 hours. Curds will form a soft disk.
To avoid sticking of the milk to the pan during the process of boiling, add two tablespoons warm water to the pan before pouring in the milk.
If you don't have a heavy-bottomed pan for boiling the milk, feel free to use the microwave.
Paneer cubes are extremely soft and should be cut at least half inch thick.