Using the Bain Marie method, melt butter and marshmallows until smooth. Add vanilla extract into the marshmallow mixture.

Lightly crush the chips but the chips should still be in large, chunky yet bite-sized pieces. Combine chips with the melted marshmallows.

Grease a baking dish. Transfer the mixture into baking dish and let it cool.

When you're ready to serve, cut into small squares.