Brown sausage with vegetables. Meanwhile, beat cream cheese and milk with mixer until well blended. Combine mozzarella and Parmesan. Reserve 1 1/2 cups; mix remaining with cream cheese mixture.
Drain sausage; return to skillet. Stir spaghetti sauce, water and oregano into meat sauce. Spread 1/3 of meat sauce onto bottom of 13x9-inch baking dish; cover with 3 noodles and half the cream cheese mixture. Top with 3 noodles, half the remaining meat sauce and 3 noodles. Cover with layers of remaining cream cheese mixture, noodles, meat sauce and reserved cheese. Cover with foil sprayed with cooking spray.
Bake 1 hour or until heated through, removing foil after 45 minutes. Let stand 15 minutes before cutting to serve.