PREHEAT oven to 350° F. Grease 9-inch-square baking pan.
COMBINE flour, baking powder, baking soda and salt in small bowl. Beat butter, sugar and vanilla extract in large mixer bowl until creamy. Add eggs, one at a time, beating well after each addition. Gradually beat in flour mixture alternately with water. Stir in 1 cup morsels and nuts. Pour into prepared pan.
BAKE for 25 to 30 minutes or until wooden pick inserted in center comes out clean. Immediately sprinkle remaining morsels over warm cake; let stand for 5 minutes or until morsels are shiny and soft. Spread evenly over cake. Cool completely.