Peel potatoes and cut into 1 inch cubes. Bring water to a boil in large saucepan. Add potatoes and cook until tender. Drain, reserving liquid; set aside potatoes. Measure 1 cup cooking liquid, adding water if necessary; set aside. Peel and finely chopped onion. Melt butter in saucepan. Add onion to saucepan; cook, stirring frequently until onion is tender, but not brown. Add flour to saucepan; season with pepper to taste. Cook 3-4 minutes.
Gradually add potatoes, reserved 1 cup liquid, milk, and sugar to onion mixture in saucepan; stir well. Add cheese and ham. Simmer over low heat for 30 minutes, stirring frequently.
By Robin from Washington, IA
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Peel potatoes and cut into 1-inch chunks. Bring water to a boil in large saucepan. Add potatoes and cook until tender.