Beat the butter with the sugar until pale and light in texture. Beat the eggs. Grate the chocolate and mix with the flour, cocoa and baking powder. Add to the butter mixture a little at a time, alternating with additions of beaten egg. Mix in each addition well. Finally, add the vanilla essence and enough milk to make a soft batter. Turn into a greased and floured 23cm (9in) tin, the bottom lined with a butter wrapper cut to fit. Bake until set, 50 minutes approx., in a moderate oven, 180°C/350°F/gas 4. Cool the cake and split in two. Sandwich with half the icing and spread the remainder on top.
To make the icing, melt the chocolate in the water. Remove from the heat and beat in the butter and then the eggs very thoroughly. Leave to cool and set before icing and filling the cake.