In a non-stick skillet over medium heat, cook and stir the chicken and onion until the chicken is no longer pink and juices run clear.
Preheat oven to 350 degrees F (175 degrees C). Lightly grease a 2 quart casserole dish.
In a medium bowl, blend the melted butter, 1 1/3 cups water, and dry stuffing mix. Place 1/2 the chicken and onion mixture in the prepared dish, and cover with the stuffing mixture. Cover with the remaining chicken mixture. In a small bowl, mix the 1/4 cup water and cream of chicken soup, and pour into the dish. Top with the Cheddar cheese.
Bake 30 minutes in the preheated oven, or until bubbly and lightly browned.
