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In a large pot over medium heat, melt the butter and add the onion and fennel. Cook, stirring, until softened. Sprinkle in the flour and stir to coat the vegetables well.
Pour in ½ cup of the milk and stir until it is all incorporated. Add another ½ cup and repeat. Add the last of the milk and cook for 1 minute more or until thickened.
Add the mustard, rind and juice, and stir well to combine. Add the seafood and simmer gently for 5 minutes or until the fish and prawns are cooked through and the squid is tender. Taste and season the sauce with salt and pepper. Stir through the dill leaves.
Serve topped with reserved fennel fronds, with rice and lemon wedges, if desired.