Place potatoes in 2-quart saucepan; add enough water just to cover potatoes. Heat to boiling. Reduce heat to medium-low; cook uncovered 8 to 10 minutes or until tender. Drain.
Heat oven to 350°F In 10-inch nonstick skillet, heat oil over medium-high heat. Add bell pepper and onion; cook 3 to 4 minutes, stirring occasionally, until vegetables are tender.
Meanwhile, in small bowl, mix milk and flour with wire whisk until well blended. Stir into vegetables in skillet. Heat to boiling. Reduce heat; cook uncovered 2 to 3 minutes, stirring constantly, until thickened. Stir in mayonnaise, pepper and cheese; stir until cheese is melted.
Place ham and potatoes in ungreased 2-quart casserole. Pour milk mixture over ham mixture; stir to mix. Bake uncovered 25 to 30 minutes or until bubbly and light golden brown on top.