1. Preheat the oven to 180°C (160°C fan) or 350°F. Grease and line a baking tray (about 9x13 inches).
2. In a mixing bowl, cream together butter and sugar until light and fluffy.
3. Beat in the eggs one at a time, mixing well after each addition.
4. Add vanilla extract and mix.
5. Sift in the self-raising flour and fold gently into the mixture.
6. Add milk and stir until smooth.
7. Pour the batter into the prepared baking tray and spread evenly.
8. Bake for 25-30 minutes, or until a skewer inserted in the center comes out clean.
9. Allow the cake to cool completely before icing.
10. For the icing, mix icing sugar, vanilla extract, and water until smooth and spreadable.
11. Pour icing over the cooled cake and spread evenly.
12. Sprinkle generously with colorful sprinkles.
13. Let the icing set before slicing and serving.