In a saucepan over medium heat, cover potatoes with water and cook until almost tender; drain.
Meanwhile, cook bacon and onion in a skillet over medium heat. Drain, reserving 2 tablespoons drippings. Add coating mix, salt and milk to reserved drippings; cook until thickened. Fold potatoes into bacon mixture.
Transfer to a greased 3 1/2 quart casserole dish and bake, covered, at 350 degrees for 30 minutes. Remove cover, top with cheese and bake for another 15 minutes, or until cheese is melted.