Boil water and sugar in a pan. When the sugar completely dissolves add condensed milk and stir well for 15 to 20 minutes until the mixture becomes caramelised. Add butter, chopped cashew nuts and a few drops of vanilla essence. Mix well. Grease a steel plate with oil and transfer the mixture to the plate. Set aside to cool for one to two hours. Later cut it into small pieces. Your milk toffee is ready.