1Spray 8-inch square pan with cooking spray. In 2-quart saucepan, heat milk and salt to boiling. Gradually add grits, stirring constantly; reduce heat. Simmer uncovered about 5 minutes, stirring frequently, until thickened. Add cheese, bacon, onions and pepper; stir until cheese is melted. Spoon mixture into pan. Refrigerate at least 4 hours or up to 24 hours.
2Shape grits into 1 1/2-inch balls. In small bowl, beat eggs and water with whisk or fork. Place bread crumbs in medium bowl. Dip balls in egg mixture, then roll in bread crumbs.
3In deep fryer or heavy 3-quart saucepan, heat 3 inches oil over medium-high heat (350°F). Fry fritters, in batches, 3 to 4 minutes or until golden brown. Drain on paper towels. Place on metal cooling rack in baking pan and keep warm in 225°F oven up to 30 minutes. Serve warm.