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Remove a narrow strip of peel from center of each potato. Place potatoes and carrots in a 3-1/2- to 4-quart slow cooker. Brown both sides of lamb chops, a few at a time, in hot oil in a large skillet. Drain off fat. Place lamb chops on vegetables. Pour in water; sprinkle with 1 teaspoon fresh or 1/4 teaspoon dried dill, salt and pepper.
Cover; cook on Low for 7 to 8 hours or on High for 3 1/2 to 4 hours.
Transfer chops and vegetables to a serving platter. Cover chops and vegetables to keep warm.
For the sauce, strain cooking liquid into a glass measuring cup; skim fat from cooking liquid. Measure 1/2 cup cooking liquid. Combine yogurt and flour in a small saucepan. Stir in cooking liquid and the remaining 1 teaspoon fresh or 1/4 teaspoon dried dill. Cook and stir over medium heat until thickened and bubbly. Cook and stir for 1 minute more. Season to taste with additional salt and pepper. Serve chops and vegetables with sauce. Garnish with additional fresh dill, if desired.