In a large skillet, cook the bacon over medium heat until crisp, stirring occasionally. Remove the bacon with a slotted spoon, and drain it on paper towels. Reserve 1-½ teaspoons drippings in the pan and discard the rest.
Add the onion to the skillet with the bacon drippings. Cook and stir over medium-high heat until tender.
While the bacon and onion are cooking, place the potatoes in a large saucepan, and add enough water to cover them. Bring the water to a boil over high heat. Then, reduce the heat to medium. Cook, uncovered, for 10 to 15 minutes or until tender. Drain, reserving 1 cup potato water.
Add the corn, milk, salt, pepper, potatoes and reserved potato water to the saucepan. Heat through. Stir in the bacon and onion.
