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Firstly, wash the potatoes under running water and place them in a pressure cooker. Pour water into the cooker and boil the potatoes. Once boiled, let them cool and then and chop them. Also, chop onion and green onions. Then grate red pepper and keep it aside.
Place a saucepan over medium flame and add butter into the pan. Once the butter melts, add chopped onions and saute them for 5-6 minutes. Then add flour and stir the mixture continuously for 1-2 minutes.
Next, add potatoes, milk, chicken broth, water into the saucepan and bring the mixture to a boil. Cover the mixture with a lid and cook the mixture on low flame.
While stirring the mixture continuously, add cheddar cheese and red pepper and cook the mixture for 2-3 minutes until the cheese melts. Garnish the soup with chopped green onions and serve hot.