Prepare creamy soup mixture by melting butter in a small saucepan. Whisk in flour. Continue to stir and cook for about 2 minutes. Stir in chicken broth and milk. Cook over low-medium heat continuing to stir until thickened. Season with salt and pepper. Set aside.

Preheat oven to 350°. In a large skillet, cook sausage and onion over medium heat until thoroughly cooked. Drain and set aside.

Combine creamy soup mixture, milk, salt and pepper.

Grease a 2 qt baking dish. Layer ingredients as follows: half of the potatoes, creamy milk mixture, peppers and sausage/onion. Repeat layers.

Cover and bake 60-65 minutes or until potatoes are tender.

Sprinkle with cheese. Continue to bake, uncovered for an additional 3-5 minutes or until cheese is melted.