Heat oil in a saucepan over medium heat. Cook onion, stirring, for 15 to 20 minutes or until golden. Add vinegar and sugar. Cook, stirring occasionally, for 2 minutes or until onion is golden and soft. Set aside.
Meanwhile, place potatoes in a large saucepan. Cover with cold water. Bring to the boil over high heat. Reduce heat to medium. Cook for 10 to 12 minutes or until just tender. Drain. Set aside to cool completely.
Place onion mixture, potato and capsicum in a large bowl. Combine mayonnaise, dill, lemon juice and capers in a bowl. Season with salt and pepper. Add to potato mixture. Toss to combine. Serve.
Recipe courtesy of taste.com.au
Serving size 4