HEAT oven to 350 degrees F. Spray 8 x 8-inch pan with no-stick cooking spray.
COMBINE 1 cup flour and sugar in medium bowl. Cut in butter with pastry blender or 2 knives until mixture resembles coarse crumbs. Press firmly into prepared pan.
BAKE 12 to 15 minutes.
COMBINE sweetened condensed milk, cocoa, egg, 1/4 cup flour, vanilla and baking powder in large bowl. Dissolve coffee in hot water. Add to cocoa mixture. Mix well. Stir in nuts. Spread over baked crust.
BAKE 20 to 25 minutes or until center is set. Cool. Frost, if desired.