Add the sugar and water to the instant pot and mix well.
Secure the lid, close the pressure valve, and cook for 11 minutes at high pressure.
Quick-release pressure.
Add the room temperature butter slices, chocolate chips and milk powder, and vanilla extract to the pot and quickly stir until well combined.
Pour/spoon the mixture into a parchment-lined 9x5 inch loaf pan and let it cool down (for 30-40 minutes), then put it in the fridge for 2-3 hours to set.
Lift from the pan using parchment, then cut into squares.
Store fudge in an air-tight container in the fridge for 2-3 weeks, or in the freezer for a few months.