Mix cream cheese and butter until smooth. Add flour slowly until well blended. Shape into a ball and chill overnight or for several hours.
Preheat oven to 350 degrees F (180 degrees C).
Roll dough out 1/8 inch thick on a floured pastry board. Cut into 2 1/2 inch squares and place about 1/2 teaspoon jam or preserves in the center. Overlap opposite corners and pinch together. Place on ungreased cookie sheets.
Bake for 10 to 12 minutes in the preheated oven. Cool on wire racks. Sprinkle kolacky lightly with confectioner’s sugar.