Heat oven to 350°F. In 3-quart saucepan, heat water and butter to boiling. Boil 1 minute, stirring constantly. Add milk; remove from heat.
Stir in mashed potato mix with fork until potatoes are desired consistency. Stir in sour cream and cheese. Spoon into ungreased 13x9-inch (3-quart) glass baking dish. Sprinkle bacon and onions over top.
Bake 20 to 25 minutes or until hot.