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 9x13 pan. Cool thoroughly and cut into small squares. If desired, add 1 cup chopped nuts to fudge before pouring into pan to cool.