Beat 1/2 C butter at medium speed with an electric mixer until creamy. Gradually add 1/4 C sugar, beating well. Add eggs one at a time.
Combine 2 C flour, baking powder, and salt. Stir well. Combine milk and water, stir well. Add flour mixture to butter mixture alternatively with milk mixture, beginning and ending with flour mixture. Mix at low speed after each addition until mixture is blended. Gently stir in blueberries and cream cheese.
Pour into a greased 9-inch square pan.
Combine 1/2 C flour and remaining 3 ingredients. Stir well with a fork. Sprinkle this mixture over the batter and bake for 55 minutes.