Baked Spaghetti

12 oz. spaghetti, cooked and drained
1 cup chopped onion
1 cup chopped green pepper
1 Tbsp. butter
1 can (28 oz.) diced tomatoes with liquid
1 can (2-1/4 oz.) sliced ripe olives, drained
2 tsp. dried oregano
1 lb. ground beef, browned
2 cups (8 0z.) shredded cheddar cheese
1 can (10-3/4 oz.) condensed cream of mushroom soup, undiluted
1/4 cup water
1/4 cup grated Parmesan cheese

In a large skillet, saute onion and green pepper in butter until tender. Add tomatoes, olives and oregano. Add cooked ground beef. Simmer, uncovered, for 10 minutes. Place half of the spaghetti in a greased 13x9x2 inch backing dish. Top with half of the vegetable mixture. Sprinkle with 1 cup of cheddar cheese. Repeat layers. Mix the soup and water until smooth; pour over casserole. Sprinkle with Parmesan cheese. Bake uncovered at 350 degrees for 30-35 minutes or until heated through.