HEAT oven to 400°F.
COOK and stir chicken and peppers in hot oil in large skillet on medium heat 8 to 10 min. or until chicken is done. Stir in spaghetti sauce, water and 1 cup cheese.
PLACE 1/3 of the chicken mixture in 13x9-inch pan; cover with 3 noodles. Repeat layers twice. Top with remaining cheese.
BAKE 30 min. or until heated through.