In a 3 quart sauce pan, combine potatoes, onion, bacon, and enough water to cover ingredients. Place lid on pot, and cook until potatoes are tender. Stir occasionally to prevent sticking.
Stir in milk and butter. Stir in instant potatoes to the thickness you desire. Add cheese, and stir until it melts. If desired, mix in corn. Season with salt and pepper to taste. Simmer over low heat for 10 to 20 minutes, and serve.