Peel potatoes and cut into 3/4 inch cubes; set aside.
Melt butter in 2 or 3 quart saucepan. Add onion; saute 5 minutes. Add potatoes and water. Cover, bring to a boil and cook until potatoes are just tender, about 15 minutes.
Remove 1 cup of potato cubes with a slotted spoon; set aside.
Pour contents of the saucepan into an electric blender container. Holding lid securely, blend until smooth: return to saucepan. Mix in reserved potatoes and parsley. Season with salt and pepper. Heat through.