Sausage and Peppers Lasagna

½ pound Italian sausage

1 onion, chopped

½ cup chopped green pepper

½ cup chopped red pepper

2 (8 ounce) packages PHILADELPHIA Cream Cheese, softened

½ cup milk

2 ½ cups KRAFT Shredded Low-Moisture Part-Skim Mozzarella Cheese, divided

½ cup KRAFT Grated Parmesan Cheese, divided

1 (24 ounce) jar spaghetti sauce

½ cup water

½ teaspoon dried oregano leaves

12 lasagna noodles, cooked

12 slices PEPPERIDGE FARM® Garlic Texas Toast, prepared as directed on package

Heat oven to 350 degrees F.

Brown sausage with onions and peppers. Meanwhile, beat cream cheese and milk with mixer until well blended. Combine mozzarella and Parmesan. Reserve 1-1/2 cups; mix remaining with cream cheese mixture.

Drain sausage; return to skillet. Stir spaghetti sauce, water and oregano into meat sauce. Spread 1/3 of meat sauce onto bottom of 13x9-inch baking dish; cover with 3 noodles and half the cream cheese mixture. Top with 3 noodles, half the remaining meat sauce and 3 noodles. Cover with layers of remaining cream cheese mixture, noodles, meat sauce and reserved cheese. Cover with foil sprayed with cooking spray.

Bake 1 hour or until heated through, removing foil after 45 min. Let stand 15 min. before cutting to serve. Serve with toast.