In a bowl, combine onions, crumbs and Parmesan cheese. Add beef and mix well. Shape into 1-in. balls; place on a greased rack in a shallow baking pan. Bake at 400° for 15-20 minutes or until no longer pink.
Meanwhile, arrange bread in a single layer in an ungreased 13-in. x 9-in. x 2-in. baking dish (all of the bread might not be used). Combine cream cheese, mayonnaise, Italian seasoning and pepper; spread over the bread. Sprinkle with 1/2 cup mozzarella.
Combine sauce, water and garlic; add meatballs. Pour over cheese mixture; sprinkle with remaining mozzarella. Bake, uncovered, at 350° for 30 minutes or until heated through. Yield: 6-8 servings.