Whisk flour and milk in a large saucepan until smooth. Bring to a boil; cook and stir for 2 minutes or until thickened.
Stir in the chunky potatoes, 1 cup cheese, salt and pepper. Cook over medium heat for 2-3 minutes or until cheese is melted.
Remove from the heat. Stir in sour cream, 1/2 cup cheese, and 1/4 cup onions until blended. Add in diced ham. Cover; cook over medium heat for 10-12 minutes or until heated through (do not boil).
Garnish with remaining cheese and onions or chives!