Heat oven to 350°F. Butter and flour 8 x 8 x 2-inch glass baking dish.
Mix flour, baking powder and salt in medium-size bowl.
Mix sugar, butter, chocolate and cocoa powder in a large bowl.
Bring milk to boiling in small saucepan. Pour hot milk over chocolate mixture; whisk until chocolate has melted and mixture is smooth. Stir in eggs and vanilla. Whisk in flour mixture. Fold in the peanut-butter cups. Pour batter into prepared pan.
Bake in 350°F oven for 40 to 45 minutes or until wooden pick inserted in center comes out clean. Cool cake in dish on wire rack.
Beat together cream cheese and butter in medium-size bowl until smooth and creamy. Gradually beat in sugar and vanilla.
Spread frosting evenly over top of cooled cake. Sprinkle top with the 1/4 cup chopped peanut butter cups. Cut into 16 squares.