Place chocolate chips, peanut butter and butter in a microwave-safe bowl and microwave uncovered on high for 1 minute. Stir and continue to microwave in 30 second increments until able to stir completely smooth.
Stir in vanilla, then pour mixture over cereal, stirring to evenly coat.
Pour 2 cups powdered sugar into the bowl and mix to coat the cereal. Add remaining cup as needed. (See note)
Once mixture is cool, add M&M's.
Store in air tight container.
I usually don't measure the powdered sugar. I keep adding more until the cereal is completely white. You can adjust the amount of powdered sugar to suit your tastes.For a salty/sweet mix, add 1 cup salted peanuts and/or mini pretzels to the mix.