In a double boiler, combine marshmallows and water. Place in kettle over boiling water and cook until marshmallows are completely dissolved, stirring occasionally. In a large heavy saucepan, combine sugar, butter, milk and salt. Mix thoroughly. Bring to a rolling boil over medium heat. Continue boiling for 8 minutes, stirring constantly. Remove from heat and stir in melted marshmallow mixture and chocolate chips. Mix until thoroughly blended. Pour into greased 9×13 pan. Cool thoroughly and cut into small squares. If desired, add 1 cup chopped nuts to fudge before pouring into pan to cool.