In a large bowl, cream the butter and sugar with an electric mixer until light and fluffy. Beat in vanilla. Gradually add flour and condensed milk, beating well after each addition. Stir in chocolate chips and coconut.
Shape into small balls and placed on a tray lined with baking paper. Cover and refrigerate for 1 1/2 hours or until firm.
Once firm, dip balls in melted chocolate allowing excess to drip off. Refrigerate for 15 minutes until firm. Store in the fridge.