Beat cream cheese, butter, lemon juice, lemon rind, and vanilla together until smooth and fluffy.
Add 3 cups powdered sugar and beat together. Add the additional 2 cups of powdered sugar. Beat until creamy. Add more icing sugar or juice as needed for easy spreading.
Preheat oven to 350 degrees F.
Sift the flour with the baking powder.
In a large bowl, beat butter with sugar and add the yolks one at the time mixing very well. Add lemon rind and the milk alternately with the flour.
Beat egg whites until stiff. Fold the egg whites very carefully into the mixture.
Pour mixture into a 9" round greased cake
pan. Bake at 350 degrees F for 20-25 minutes or until done.
Remove cake from pan and let cool completely.
Cut cake into layers and fill with icing. Spread icing over the entire cake until covered. Use thinly sliced lemon pieces cut in half around the bottom of the cake.