Preheat oven to 350°. Line 2 12-cup muffin tins with cupcake liners.
Beat cream cheese, egg, and 1/3 cup sugar on medium speed until light and fluffy (about 2 minutes). Stir in the chocolate chips. Set aside.
In a large bowl, combine flour, 1 cup sugar, cocoa powder, baking soda, and salt. Make a well in the center, and add water, oil, vinegar, and vanilla. Mix just until blended.
Fill each muffin cup one-third full with the chocolate batter. Top with a spoonful of cream cheese mixture, until cups are about two-thirds full. Bake 22 to 28 minutes, until the tops spring back lightly when touched.
Cool in pans for 10 minutes. Remove to wire racks to cool completely.
Makes about 24 cupcakes.