In a skillet, cook onions in butter until lightly browned. Add soup and water; season with salt and pepper and thyme. Arrange potatoes and 1/2 cup of the cheese in a buttered 2-quart casserole. Pour onion mixture over ingredients in casserole and top with remaining cheese. Bake at 350° for 15 to 20 minutes, or until heated through and lightly browned.