PREHEAT oven to 350°F. Cook potatoes in boiling water in large saucepan 5 min. or until tender; drain. Layer potatoes and onions in 2-qt. casserole dish.
PLACE Velveeta, milk and mustard in large microwaveable bowl. Microwave on HIGH 2 min. or until Velveeta is completely melted, stirring after 1 min. Pour over potatoes; cover.
BAKE 25 min. or until heated through.