PREHEAT oven to 350°F. Microwave chocolate, 1/2 cup of the sugar and the water in large microwaveable bowl on HIGH 2 min. or until chocolate is almost melted, stirring after 1 min. Stir until chocolate is completely melted. Cool to lukewarm.

MIX flour, baking soda and salt; set aside. Beat butter and remaining 1-1/4 cups sugar in large bowl with electric mixer on medium speed until light and fluffy. Add eggs, 1 at a time, beating well after each addition. Add flour mixture alternately with the milk, beating until well blended after each addition. Add chocolate mixture and vanilla; mix well. Pour into 2 greased and floured 9-inch round cake pans.

BAKE 30 to 35 min. or until toothpick inserted in centers comes out clean. Cool in pans 10 min.; remove from pans to wire racks. Cool completely. Frost as desired with Easy Chocolate Frosting.