Heat oven to 400°F. Spray 13x9-inch (3-quart) baking dish with nonstick cooking spray.
In medium saucepan, combine milk, flour, salt and pepper; blend well. Cook and stir over medium-high heat until bubbly and thickened.
In large bowl, combine potatoes, ham, sour cream, cooked sauce and 1 cup of the cheese; mix well. Spoon potato mixture into sprayed baking dish. Sprinkle top with remaining 1/2 cup cheese.
Bake at 400°F. for 15 to 20 minutes or until casserole is bubbly and cheese is melted. Let stand 5 minutes before serving.