In a large mixing bowl, combine the warm milk, granulated sugar, and active dry yeast. Stir gently and let it sit for 5 to 10 minutes. The mixture should become foamy. If it does not foam, the yeast may be expired or the milk may have been too hot.

Add the egg, melted butter, and vanilla extract to the yeast mixture. Whisk everything together until smooth. Make sure the melted butter is not too hot, or it could cook the egg.

Gradually add the flour and salt. Mix with a wooden spoon or a stand mixer fitted with a dough hook. Knead for about 8 to 10 minutes by hand, or 5 to 7 minutes with a mixer, until a soft and slightly tacky dough forms. The dough should pull away from the sides of the bowl but still feel pliable.

Gently knead in the chocolate chips. Fold the dough over itself a few times to distribute the chips evenly. Do not overwork the dough at this stage, or the chips may start to melt.

Shape the dough into a ball and place it in a lightly greased bowl. Cover with a clean kitchen towel or plastic wrap. Let it rise in a warm spot for about 1 hour, or until doubled in size.

Punch down the dough gently to release the air. Turn it out onto a lightly floured surface. Roll it into a rectangle about 10 by 14 inches. Keep the dough even in thickness so the Nutella distributes well.

Spread the Nutella generously over the center third of the rectangle, leaving a border around the edges. You can warm the Nutella slightly to make it easier to spread, but do not let it become runny.

Fold one side of the dough over the Nutella, then fold the other side over the top, like folding a letter. Pinch the seams and ends firmly to seal. Carefully shape the filled dough into a loaf.

Place the loaf seam-side down on a lined baking tray. Cover it loosely and let it rest for 20 to 30 minutes. The dough will puff slightly but does not need to double again.

Preheat your oven to 175 degrees Celsius or 350 degrees Fahrenheit. Brush the top lightly with milk or beaten egg. Sprinkle extra chocolate chips over the top, pressing them in just a little so they stick.

Bake for 25 to 30 minutes, until the top is golden brown and the loaf sounds hollow when tapped. If the top browns too quickly, tent it loosely with foil during the last 10 minutes.

Let the bread cool on the tray for about 10 minutes. Then transfer it to a wire rack and let it cool slightly before slicing. Cutting too early can cause the Nutella center to run out.