Preheat oven to 350 degrees. Cream together 2 cups sugar and 1 cup shortening. Beat in eggs 1 at a time. Sift the flour together.

Add to the sugar mixture, alternating with the cup of milk. Stir in vanilla. Pour into 3 greased and floured cake pans. Bake for 30 to 35 minutes. Meanwhile place 1 cups sugar and 1 cup milk in saucepan and bring to a boil. Add coconut and marshmallows. Stir and boil for 5 minutes. Stir in vanilla. Spread between layers while they are still hot. Let cool and frost.

Icing: Combine all ingredients and cook over medium heat. Stir constantly until thick and it forms a soft ball when small amount is dropped in cold water. Cool and frost top and sides of cake.