Preheat oven to 350 degrees F. Grease bottom and sides of 9-inch square baking dish.
In 3 quart saucepan over medium heat, melt the butterscotch chips and butter. Remove from heat and cool to lukewarm.
Add flour, sugar, baking powder, salt, vanilla and egg to the butterscotch mixture. Mix well.
Fold in marshmallows, chocolate chips, and nuts into the butterscotch mixture until just combined, about 5 strokes. Spread in prepared pan.
Bake for 20 to 25 minutes. Do not overbake. Center will be jiggly but becomes firm upon cooling.