Preheat the oven to 180 degrees C. In a medium bowl, stir together 1 cup of plain flour and sugar. Cut in butter until the mixture is crumbly. Press firmly into the bottom of a 23cm square baking tin.
Bake for 15 minutes in the preheated oven, until firm and slightly golden. Set aside to cool.
In a medium bowl, mix together 1/4 cup flour, baking powder and cocoa powder. Make a well in the centre, and add the egg, vanilla and condensed milk. Mix until well blended. Stir in the chopped chocolate and walnuts. Spread the mixture over the cooled crust.
Bake for 20 minutes in the preheated oven, until brownies begin to pull away from the edges and the top appears dry. Cool and cut into squares. Store tightly covered at room temperature.