In a bread machine pan, place the milk, beaten egg, melted butter, water, vanilla pudding mix, bread flour, sugar, salt and yeast in the order recommended by the manufacturer. Select the Dough cycle.
When cycle is finished, remove the dough, and knead for 3 to 5 minutes. Roll out to a large rectangle.
Mix together the softened butter, brown sugar and cinnamon. Spread over dough. Sprinkle with chopped walnuts and raisins, if desired. Starting with the widest end, roll the dough into a log. Pinch to seal seams. Cut into 3cm slices and place in a greased 20x30cm pan. Place in a warm space and allow to rise until doubled.
Preheat the oven to 180 degrees C. Bake for 15 to 20 minutes. To make icing, mix the milk, icing sugar, softened butter and vanilla in a small bowl. Spread over warm cinnamon rolls.