1Heat water to boiling in 4-quart Dutch oven. Meanwhile, cut potatoes into 1/2-inch cubes. Add potatoes to boiling water; return to boiling. Reduce heat; cover and simmer 5 to 7 minutes or until tender.
2Drain potatoes well; reserve 2 cups potatoes. Place remaining potatoes (about 3 cups) in blender. Add 1 cup of the milk; cover and blend until smooth, adding additional milk if necessary. Return blended mixture to Dutch oven.
3Add reserved 2 cups potatoes, remaining 1 cup milk, the margarine, salt, pepper, 3/4 cup of the onions and 3/4 cup of the cheese to saucepan. Cook over medium heat 5 to 10 minutes, stirring frequently, until soup is hot and cheese is melted.
4To serve, spoon soup into 4 individual soup bowls. Top each with 1 tablespoon each of the remaining onions and cheese.