Spread cream cheese in an even layer in the bottom of an 8x8-inch baking dish.
Cook and stir beef in a skillet over medium-high heat until browned and cooked through, 5 to 10 minutes. Add water and taco seasoning mix; stir. Simmer until most of the liquid evaporates, 3 to 5 minutes.
Spread meat mixture over the cream cheese in the baking dish. Pour salsa over meat mixture. Top with Cheddar cheese.
Bake taco dip in preheated oven until bubbling and cheese is melted, about 20 minutes.