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Cheddar Potato Soup with Bacon

['4 bacon slices', '1 large onion', '1 pound boiling potatoes', '1/4 cup all-purpose flour', '1 3/4 cups water', '1 1/2 cups chicken broth', '1/4 cup dry white wine', '2 cups grated sharp Cheddar (about 8 ounces)', '2 tablespoons chopped fresh chives']

Chop bacon and in a large heavy saucepan cook over moderate heat, stirring occasionally, until crisp. Transfer bacon with a slotted spoon to paper towels to drain, reserving fat in pan.
While bacon is cooking, chop onion. Peel potatoes and cut into 1/2-inch cubes. Cook onion in reserved fat over moderate heat, stirring occasionally, until softened. In a measuring cup stir together flour and water and add to onion with potatoes and broth. Simmer mixture 5 minutes, or until potatoes are just tender. Add wine and simmer 1 minute.
Reduce heat to low and gradually stir in Cheddar (do not let boil).
Divide soup among 4 bowls and sprinkle with bacon and chives.

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