Pre-heat the oven to 175ºC. Grease and line 2 x 6" cake tins (you can use two 8" pans but the layers will be thinner).
In a food processor or by hand, beat the sugar and butter together until light and fluffy. Add the eggs, one at a time.
Using a rolling pin, bang the walnuts into a gravel-like consistency then combine with the flour, baking powder and baking soda. Fold into the wet ingredients.
Mix the coffee and milk together then mix into the batter. A fairly soft dropping consistency should be achieved (add a little more milk if needed).
Divide the mixture equally between the two pans and then bake for around 30-35 minutes (if baking 8" cakes, bake for 20-25 minutes). The cakes are ready when they bounce back after being gently pushed down (or an inserted skewer comes out clean).
Take out of the oven and let them cool for about ten minutes. If using spring-form pans, remove the sides until the cakes are fairly cool and then turn out onto a wire rack (top side down) until they are completely cold.
In the meantime, prepare the frosting: beat the butter and cream cheese together until nice and smooth. Add the coffee to the water and stir in. Finally, add the icing sugar just until a thick, spreadable consistency is achieved.
Spread half of the frosting on the flat side of one of the cakes. Place the other cake on top and then slather the remaining frosting all over the top of it. Decorate with pretty walnuts (I used some whole and some crushed). This is a big cake, tall cake so you only need thin slices. Enjoy!