Preheat oven to 350°F.
Butter and flour a 10-inch Bundt pan or tube pan. Combine flour, baking powder and salt in a bowl and set aside.
In a large mixing bowl, cream butter and sugar until light and fluffy. Add the eggs, beating in after each.
Add milk, coffee dissolved in water, and vanilla; mix well. Gradually beat in flour mixture.
Pour half of the batter into prepared pan. Sprinkle the chocolate chips and 1½ teaspoon of coffee evenly over batter.
Gently swirl the chips and coffee powder through the batter with a knife. Cover remaining batter.
Bake 35-45 minutes or until a toothpick inserted in center comes out clean.
Cool on wire rack.
Turn the cake out on a serving platter with fluted side up. Dust with sifted powered sugar and sprinkle with cinnamon.