In a mixer bowl combine the 1 cup powdered sugar and cream cheese; beat till fluffy.
Beat in the vanilla.
If necessary, beat in enough milk (about 2 teaspoons) to make of pouring consistency.
For icing, reserve 1/4 cup of the mixture to decorate the top of the cake.
For filling, stir the cocoa powder into the remaining mixture in bowl.
Add the remaining 1/2 cup powdered sugar and beat till smooth.
Use the cocoa mixture to spread between cake layers.