In a large bowl combine the condensed milk, powdered sugar and vanilla extract. Stir well until thoroughly incorporated and smooth. Add the coconut and stir well to combine.
With a tablespoon, scoop out portions of the candy mixture onto a baking sheet. With wet hands roll the candies into rounds. Refrigerate until firm, about 1 hour.
In the top of a double-boiler or metal bowl set over a pot of simmering water, melt the chocolate chips. Pourthe chocolate into a shallow bowl and, using two forks or toothpicks, dip the coconut balls into the chocolate and roll to coat completely. Shake off the excess, and place on a rack set over a baking sheet covered with wax paper. Repeat with the remaining candies and let air dry, or refrigerate to harden.
Yield: about 48 candies