1In 2-quart saucepan, heat water, butter and salt to boiling over medium-high heat. Remove from heat. Stir in milk and potatoes (dry) just until moistened. Let stand about 30 seconds or until liquid is absorbed; whip with fork. Set aside.
2In 6-quart heavy stockpot, cook bacon over medium heat until crisp. Use slotted spoon to transfer bacon to paper towels, leaving drippings in stockpot. Add onion and pepper to stockpot. Cook 4 to 5 minutes or until onions are translucent and lightly browned. Add potatoes and broth to stockpot. Beat with whisk until ingredients are well combined. Continue to cook until heated through.
3Transfer soup to bowls. Top with bacon, cheese and green onion.