In greased deep 2 qt. Round casserole, mix well flour, 1/2 cup granulated sugar, nuts, 3 tblsp. Cocoa, baking powder and salt; set aside.
Mix well milk, butter and vanilla; stir into flour mixture to blend well. Sprinkle evenly with remaining 1/3 cup cocoa and 1/2 cup gran. sugar. Pour on water.
Bake in preheated 350 degree oven 40 minutes or until toothpick comes out clear.
Sprinkle with conf. sugar. Serve sauce with cake. Pass cream. Or top with ice cream. 6 to 8 servings