MICROWAVE potatoes and water in covered 3-qt. microwaveable dish on HIGH 15 to 17 min. or until potatoes are tender, stirring after 10 min.; drain. Return potatoes to dish; set aside.
MICROWAVE cream cheese and milk in microwaveable bowl 1 min.; stir until smooth. Pour over potatoes; sprinkle with dill.
MICROWAVE 1 to 2 min. or until heated through; stir gently.