Taco Casserole

1 lb. ground beef

1 small onion, chopped

1 (8 oz) bottle taco sauce

3/4 c. water

1 can (4 oz) diced green chilies

1 pkg. taco seasoning

1 pkg. (12) yellow taco shells, broken, divided

2 c. shredded cheddar cheese, divided

Preheat oven to 375 degrees. Grease 11x7 baking dish. Cook beef and onion until beef is browned. Drain. Stir in taco sauce, water, chilies and taco seasoning. Cook over low heat for 3 to 4 minutes. Layer half of broken shells on bottom of baking dish. Cover with half of meat mixture. Sprinkle with 1 cup cheese. Repeat with remaining ingredients. Bake for 20-25 minutes or until bubbly and cheese is melted.