Pioneer Cream of Potato Soup

3 Tbsp Butter
4 Tbsp Flour
1/2 tsp Salt
1/8 tsp Pepper
2 Cups Hot Milk
2 Cups Cooked (boiled) Potatoes, diced
1 Cup Potato Water (reserved from boiling potatoes)
1 Tbsp Onion, grated
Cheddar Cheese

Melt butter in saucepan. Stir in flour, salt & pepper. Add milk and cook, stirring, until thickened and smooth. Add potatoes, potato water & onion. Heat to boiling. Season to taste. Top each bowl with cheese if desired.