Line a 9x9 or 7x11 pan with foil, butter foil well. Set aside. In a heavy saucepan, combine butter, sugar, milk and marshmallows. Bring to a boil over medium heat, stirring constantly. Cook and stir for 5 minutes.
Remove from heat, stir in chips until melted; then add coconut, nuts and vanilla, mix well. Pour into prepared pan. Keep room temperature until cooled. Then cover and refrigerate 3-4 hours, or overnight.
Invert pan onto cutting board, peel off foil, and cut into squares. Store in airtight container in refrigerator or freezer.