Preheat oven to 350 degrees F (175 degrees C). Grease and flour two 9 inch round pans. Sift flour, baking soda and salt together 3 times and set aside.
In a small saucepan, heat water, chocolate and 1/2 cup sugar, stirring constantly, for 2 minutes.
Remove from heat and cool to lukewarm.
Cream butter and sugar until light and fluffy.
Add 3 eggs, one at a time, beating thoroughly after each egg.
Add half of flour mixture and beat until smooth.
Add milk and remaining flour mixture alternately in 2 parts. Beat smooth after each addition.
Add vanilla and chocolate mixture. Blend well.
Divide batter into two 9 inch pans.
Bake at 350 degrees F (175 degrees C) for 35 to 40 minutes, or until a toothpick inserted into the cake comes out clean.