Heat oven to 375. Spray a 8" x 8" baking dish w/ cooking spray. In lg bowl, combine 1 cup cheddar cheese, flour, milk, italian seasoning, onion powder, salt and pepper. Arrange 1/2 the potatoes evenly in bottom of baking dish. Pour 1/2 the cheese mix over potatoes. Arrange remaining potatoes over cheese mix. Pour remaining cheese mix over potatoes.
Dot w/ butter. Cover, bake 45 min. Remove from oven, stir gently. Cover, return to oven for 20 min.
Uncover, sprinkle w/ remaining cheddar cheese and parmesan cheese. Return to oven and bake until cheese melts, about 5 mins.