Combine peas, water, salt, pepper, and sugar in a medium saucepan. Bring to a boil; reduce heat, and cook over medium heat 8 minutes or until peas are tender.
Combine flour and butter; stir until a smooth paste is formed. Add flour mixture to peas; stir well. Gradually add milk to pea mixture; cook over low heat 5 minutes or until thickened, stirring frequently. Serve immediately.