Cook the onion and bell pepper in the butter until tender.
Add the ham during the last few minutes of cooking.
Stir in the flour, pepper and salt.
Whisk in the milk slowly until hot and bubbly.
Add the Velvetta and Miracle Whip to the thickened sauce.
Heat and stir until melted.
Combine the potatoes and cheese sauce in a large casserole dish.
Sprinkle with the Italian bread crumbs and serve.