FOR CAKE: Heat oven to 350 degrees. Grease and flour two 23 cm round baking pans or one 13x9x2 inch baking pan. In large mixer bowl, combine butter, sugar, eggs and vanilla. Beat on high speed 3 minutes. Combine flour, cocoa, baking soda, baking powder and salt; add alternately with water to butter mixture. Blend just til combined. Pour into prepared pans.
Bake 30 to 35 minutes or til wooden pick inserted in center comes out clean. Cool 10 minutes; remove from pans. Cool completely; frost.
Serves 8 to 10.
FROSTING: In small microwave-safe bowl, place chocolate chips. Microwave on high 1.5 minutes; stir. Microwave on high additional 30 seconds or til melted and smooth when stirred. (Chips may also be melted in pan over warm water). Gradually add powdered sugar and evaporated milk, beating til smooth.
About 2.5 cups frosting.