In a 6 quart stockpot, cook beef, onion and pepper over medium heat 6-8 minutes or until beef is no longer pink, breaking up beef into crumbles; drain. Add garlic; cook 1 minute. Stir in flour until blended.
Gradually stir in milk. Add potatoes, water, and bouillon; bring to boil. Reduce heat; simmer, covered, 15-20 minutes or until potatoes are tender.
Add cheese; stir until melted. Sprinkle servings with bacon.