Lightly grease or line a 20cm square baking tin (or glass dish).
Mix cold water and gelatine together in a bowl until gelatine is dissolved.
Bring 175ml water to the boil in a saucepan; add sugar and bring back to the boil. Pour sugar mixture over gelatine mixture; add vanilla extract and salt. Beat with an electric mixer until fluffy, about 20 minutes.
Spread mixture in the prepared tin; chill in the fridge for 8 hours to overnight.
Cut marshmallows into squares with a knife dipped in hot water. Press squares into the toasted coconut.