In a medium saucepan, combine the milk, heavy cream, water, and sugar.

Place over medium heat and whisk occasionally until the sugar is dissolved.

Increase the heat to medium-high and heat the mixture until bubbles form around the edge of the pan.

Remove the pan from the heat and whisk in the chocolate.

Blend mixture with an immersion blender. You can do this  in the saucepan but make sure that you are careful or you will have hot chocolate all over the kitchen!

If you do not feel like blending it then just whisk vigorously.