Preheat over to 160°C fan-forced. Grease and line a 22cm round cake tin.
Cream the butter, vanilla essence and sugar until light and fluffy.
Add an egg one at a time, beating well after each addition.
Sift the cocoa, flour and baking powder together and add to the creamed mixture alternately with the milk.
Pour mixture into the prepared cake tin and bake for 45-55 minutes or until a skewer inserted into the centre comes out clean. Cool in the tin for 10 minutes before turning out onto a wire rack to cool completely.
Sift the icing sugar and cocoa into a mixing bowl.
Add the butter and sufficient water to the mix to make it a spreadable consistency. Flavour with vanilla essence.