Prepare potatoes. Melt butter in large saucepan. Add flour and blend. Gradually add the milk and cook till thick. Add remaining ingredients, still until cheese melts and sauce is smooth. Stir in potatoes. Pour into a greased casserole dish. Bake, uncovered, at 350 degrees for 25-30 minutes or until top is browned.
For best results use only real butter and whole milk. Can top with buttered soft bread crumbs.